The Western Union Company Stock

Good day, and welcome to the Western Union Third Quarter 2026 Results Conference Call. [Operator Instructions] 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 third quarter results and full year 2026 outlook, 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 2025 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. Where possible, 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 third quarter 2026 Financial Results Conference Call. The last 18 months have been a difficult period for the remittance industry, particularly for those of us with relatively large retail franchises in the Americas. We have seen both an overall decline in the retail market and an acceleration of the shift towards digital. Our Americas digital business has held up much better than our retail business. That said, we are seeing signs of gradual improvement with the North America retail transaction growth rate improving by 400 basis points from the first quarter through October. This is mirrored in key corridors such as U.S. to Mexico, where we have seen a 600 basis point improvement in transaction growth rates across all channels since the fourth quarter of last year.

We are now seeing growth in key corridors such as U.S. to Jamaica, U.S. to Philippines, U.S. to Kenya and Thailand. And while U.S. to Venezuela, Nicaragua and Guatemala remain challenging. Given these trends, we remain optimistic that overall transaction growth from the U.S. has the potential to turn positive in next year. As has been the case throughout this difficult period, our business benefits from our broad offerings and our global footprint. As a result, in the third quarter, we continued to see more normalized performance despite the strong macro headwinds we continue to face in the Americas. This enabled us to report revenue of $1 billion, which on an adjusted basis was a decline of only 1% year-over-year. Consumer Money Transfer, or CMT transactions grew 2% in the quarter and CMT revenue declined just 2%, a 100 basis point improvement from the second quarter. Adjusted earnings per share were $0.42 in the quarter. This was ahead of our expectations as we have made substantial progress on our Beyond efficiency program, which I will discuss in greater detail later in my prepared remarks.

Our branded digital business continued to perform well in the quarter with transactions up 21% and adjusted revenue up 8%. Results were again supported by strong growth in our Middle Eastern digital business, where we continue to see meaningful transaction growth from Saudi Arabia. In September, based on unit level economics, we decided to reduce our payout to account volume with one of our larger Saudi partners. As we work to strengthen our operating margins in the back half of the year, we no longer view this business as economically viable.

Transaction level profitability has continued to deteriorate due to recent changes in the reimbursement from the Pakistan Remittance Initiative, or PRI, a higher cost of capital associated with this business and intense competition in the Saudi market. This decision will likely lead to meaningfully lower branded digital results in the next few quarters, particularly in transaction growth rates. However, given the low margin of this business, we do not expect a meaningful impact on profits.

In Consumer Services, adjusted revenue grew 4% in the quarter versus the prior year quarter, in line with the mid-single-digit growth we discussed last quarter, driven by growth in our bill pay business.

While there is still plenty of room for improvement, I am pleased with our overall financial results in the quarter as I believe they reflect significant improvement in execution by the team in a difficult operating environment. Our adjusted operating margin increased to 18% in the quarter, a 300 basis point improvement over the first half of the year.

A key driver of this improved operating performance was the actions we began taking in the second quarter to better align our cost structure with the realities of becoming a more digital-first company. As I discussed last quarter, our brand, customer relationships, market position and digital capabilities continue to provide a strong foundation on which to build. However, we must accelerate the transformation of our operating model so that we can continue investing in our next-generation digital initiatives while significantly lowering our ongoing operating costs. Our goal was to reduce run rate operating costs by $50 million by the end of the year. We are now on track to meaningfully exceed that goal with actions taken to date representing more than $80 million in run rate operating expense savings.

Last quarter, we outlined the five key pillars of our Beyond efficiency program. We have made progress across all five. A few highlights include accelerating the relocation of our Americas regional operating center from Costa Rica to Guatemala, we now expect the transition to take place in the first half of next year. Once fully implemented, we believe this change will generate more than $25 million in savings for the company. Executing a meaningful restructuring during the quarter that will allow us to continue evolving our workforce and focus on our most compelling projects. These actions resulted in a reduction of more than 500 FTEs. We launched a voluntary retirement program where we expect nearly 150 full-time employees to accelerate their retirement before year-end. Finally, we have successfully implemented AI in our treasury funding operations, our customer care Q&A function, HR support and in technology engineering, improving performance and reducing manual effort. We believe the adoption of our platform and these tools is now broad enough to continue to drive ongoing innovation and additional benefits across the company. These initiatives are designed to create a leaner organization while maintaining our ability to invest in our most important strategic priorities. Although Beyond efficiency program lowers ongoing operating costs, implementing these changes also entails onetime costs as reflected in the quarterly financial results we released this afternoon. We are encouraged by the momentum we have built through this program, and I look forward to updating you on our continued progress in the coming quarters.

Long-term success of our shareholders depend for our shareholders, depends on transforming Western Union from a predominantly retail cash-to-cash consumer remittance company into a digital-first omnichannel consumer financial services company. We have many of the assets and capabilities needed to make this possible. However, a transformation of this scale at a large public company is neither easy nor seamless.

We experienced challenges earlier this year as the disruption to our legacy business model outpaced our ability to transform our cost structure. Following this past quarter, I believe we are moving our cost structure back into alignment with the pace of change in our business. Our three platforms for future growth are our global digital remittance business, our omnichannel consumer services business and our U.S. dollar payment token or USDPT, stablecoin platform and related initiatives.

Our digital payout remittance business continues to perform well. Transactions originated and paid out digitally grew 20-plus percent with revenue up double digits compared to prior year. Transactions and revenue originated at retail and paid out digitally grew about 20%, albeit from a smaller base. Our branding, pricing and payout network enables us to succeed in this growing and competitive market. We are confident that this is the future of the remittance business and believe we are well positioned to continue to win. Success will depend on how effectively we manage our business as the market continues to move away from cash transactions. For example, noncash funding accounted now for more than 20% of our North American retail transactions in the quarter, putting us in what we believe is a leading position as retail also evolves towards digital funding and digital payout.

As we accelerate our digital transformation, a key to success is ensuring that our customer-facing experiences are and remain best-in-class. This is an area where we have historically lagged. I am, therefore, pleased with the continued pace of the rollout of our Beyond digital platform, which we believe will put us at the forefront of digital remittance experiences. We have launched the platform in Canada and are now accelerating the rollout across other markets. The platform is now live in Argentina, Panama and Peru and is in the family and friends phase of rollout in Chile. We plan to launch in Denmark, Norway, Sweden and Finland in the coming weeks, followed by Mexico, Australia and U.S. in the first half of 2027. The Beyond platform is expected to improve customer onboarding and the user experience while enabling us to deploy updates and make changes much faster. It simplifies our technology footprint from the more than 40 applications we have today to a small number of regional applications, creating a more scalable and efficient platform as well.

In addition to improving our customer-facing applications, we are focused on digital delivery. Payout to account is by far the fastest-growing part of our business. Expanding our network to reach the endpoints where customers want as efficiently as possible is one of our highest priorities. On a recent call, we discussed the rapidly evolving payout market in Colombia, where we believe it is a microcosm of the global market. It illustrates the power of digital delivery when a real-time payments network, an active banking market and a well-funded digital wallet coexist in the same ecosystem.

Speed and access are and will remain competitive differentiators. We need connections to the right partners on economically favorable terms so that we can price transactions competitively, deliver them in real time and earn attractive margins. When done correctly, revenue per transaction is indeed lower, but so is the cost of delivery, allowing us to offer a compelling consumer experience while still earning an attractive margin.

Managing the difference in unit economics between cash payouts and account payouts as the market transitions will be important to our success. Our goal is to ensure that we emerge with a strong position in this evolving market. It would be easy for us to rely on cash payout economics for as long as possible, but we believe doing so would risk seeding the future of the market to newer, more digitally focused players. This is the lesson we learned from our U.S. domestic money transfer experience over the past decade.

I would now like to discuss our third growth engine. In the last three months, we have made significant progress and are now gaining traction in the market with our USDPT platform. We currently have about $20 million in USDPT in circulation and are seeing approximately $150 million to $200 million in transaction volume every 30 days. As a reminder, our objective is straightforward: use regulated digital assets to improve how Western Union settles with its agent network, connect digital value to real-world liquidity and give customers practical ways to hold and spend dollar value. We believe Western Union is uniquely positioned to address the core challenges in this space, cross-border settlement, last-mile access, trust, compliance and distribution. We launched USDPT in May as a U.S. dollar-denominated payment stablecoin, fully backed by U.S. dollars issued by Anchorage Digital Bank and built on Solana. It is the first -- its first purpose is institutional, to create a near instant 24/7 settlement layer between Western Union and our agents. Over time, we expect that this can reduce the latency and fragmentation of the traditional correspondent banking, lower idle cash balances and allow us to deploy liquidity more dynamically across our network.

In June, ByBit became the first major crypto exchange to integrate USDPT, creating an on- and off-ramp in select Latin American markets that allow our agents to convert USDPT into local currency. Two agents are now using our USDPT settlement capabilities in that region and several more are onboarding -- are in the onboarding process. In August, we launched Stablecard by Western Union, which combines a USDPT account with a Visa secured card. It allows consumers to receive Western Union transfers, hold USDPT and spend wherever Visa is accepted. If you have not done so already, I encourage you to search for Stablecard by Western Union in the App Store and download the Western Union USDPT app and give it a try. This product is particularly relevant in markets where consumers face currency volatility or limited access to dollar-denominated value. The goal is not to ask customers to become crypto experts. It is to give them a simple compliant experience that lets them preserve value and use it immediately for purchases or cash access.

Receiver Redirect, which we plan to launch before the end of the year, brings these pieces together. Ascender can initiate a transfer through Western Union. The value can move on the blockchain using USDPT and the recipient can receive and hold that value. It creates a direct connection between our global money movement network, our digital asset ecosystem while expanding customer choice in how funds are received and used.

Our near-term focus is disciplined scaling. This means expanding our availability market by market, adding high-quality partners, building liquidity and reliability and embedding compliance at every step. We will move deliberately because trust is central to our brand and regulatory requirements differ by jurisdiction. We will measure progress by adoption and utility, not headlines. Key indicators will include settlement volumes, receiver redirects, market expansion, customer engagement and the economics of these new transaction flows. As these capabilities scale, we expect to learn quickly, refine the customer experience and prioritize the use cases with the clearest path to sustainable returns.

Stepping back, digital assets reinforce the broader transformation of Western Union. We have global reach, a trusted brand, deep regulatory capabilities and a differentiated ability to connect digital and physical channels. USDPT gives us a settlement foundation. The digital asset network extends access and stable card creates everyday consumer utility. We are still in the early stages of this initiative and execution remains the priority. But the strategy is tangible, the products are launching and the partner ecosystem is developing. Our goal is to make digital assets useful on a global scale. faster and more efficient behind the scenes, simple and practical for customers and grounded in the trust and compliance that have defined Western Union for generations.

Before I conclude, I would like to give a quick update on Intermex. We have now passed our second HSR review window, which expired on November 2, again, clearing us of the HSR review requirement as laid out in the merger agreement. We are actively engaged in discussions with California regulators around their change of control approval, a requirement needed to close the transaction. We have recently received feedback from the DFPI and are actively working to determine an acceptable path forward. November 10, 2026, is the outside date included in the merger agreement, at which point either party has a right to terminate the agreement.

In closing, our financial results this quarter better reflected our underlying business, and we remain confident in our ability to continue to improve performance and unlock the value that exists within this franchise. We are focused on driving growth through our digital initiatives, improving efficiency throughout the organization, allocating capital with discipline and executing against a well-defined strategic plan. We recognize that rebuilding momentum requires both patience and execution. However, we believe the actions that we are taking today will position the company for a stronger future. We appreciate the continued support of our shareholders and the dedication of our employees who remain committed to serving our agents and our customers and advancing our strategy. While there is significant work ahead, we are focused on delivering the results that drive long-term value for our shareholders.

Thank you, and I will now turn it over to Matt to review our financial results and outlook.

Thank you, Devin, and good afternoon, everyone. I'm going to provide additional color on our third quarter results as well as update you on our 2026 financial outlook.

In the third quarter, GAAP revenue was $1 billion, which on an adjusted basis was down 1% compared to the prior year period. The decrease was driven by a continued slowdown of our Americas retail business, partially offset by growth in our branded digital and consumer services businesses, which grew 8% and 5% on an adjusted basis. Adjusted revenue was slightly lower than our expectations, mainly due to ceasing account payout transactions for one of our larger Saudi partners, as Devin mentioned earlier.

Adjusted operating margins was 18% in the quarter, down from 20% in the prior year period, which was mainly impacted by revenue mix and higher agent signing bonuses. That said, adjusted operating margin improved substantially relative to the first half of the year, reflecting the early benefits of our Beyond efficiency program. We are beginning to see the results of our efforts come through with cost reductions across the organization, helping to offset revenue pressures and support margin performance. Compared to the first half of the year, we have demonstrated improved cost discipline with the benefits of these actions contributing to stronger sequential margin performance while we continue to make progress towards our longer-term efficiency goals.

As Devin mentioned, there remains significant opportunity ahead as we continue to execute our Beyond efficiency program across the business. I'm pleased to say that we're ahead of our plans of achieving $50 million of annualized run rate savings by the end of this year, driven by the actions executed to date. We believe this outperformance is setting us up well to deliver against our 2027 Beyond efficiency targets. These actions have resulted in almost $40 million in restructuring costs related to our Beyond efficiency program, primarily related to severance and early retirement costs. We expect the benefits from these actions to flow through our financial results over the next several quarters. These actions are expected to further improve our cost structure, enhance our operating leverage and drive sustainable margin improvement. Adjusted EPS came in at $0.42 in the current quarter, which was better than expected due to the timing of expenses, accelerated benefits from our Beyond efficiency program and a lower tax rate. Our adjusted effective tax rate in the quarter was 9% compared to 12% in the prior year period. The decrease in our adjusted effective tax rate was primarily due to discrete expenses in the prior year period, partially offset by a proportional impact of lower forecasted full year pretax income.

Now turning to Consumer Services business, which contributed 15% of total revenue this quarter. Consumer Services adjusted revenue grew 5%, consistent with our expectations, driven by growth in our bill pay business. As mentioned last quarter, we expected Consumer Services adjusted revenue growth to slow as we lap the acquisition of Eurochange and exited unprofitable product lines.

Now transitioning to our Consumer Money Transfer or CMT business. CMT transactions grew 2% in the quarter compared to a year ago. This was driven by continued strength in our branded digital business, which delivered 21% transaction growth in the current quarter. CMT adjusted revenue declined 2% year-over-year, which was a 100 basis point improvement from the second quarter. Retail trends in the Americas remain under pressure, although the strength of our digital business enabled us to deliver improved revenue growth, demonstrating the resilience of our franchise and progress that we're making on our strategic initiatives.

In the third quarter, our branded digital business grew adjusted revenue by 8% and transactions by 21%. This marks the 12th straight quarter of solid revenue growth. Our Middle Eastern partnerships have contributed meaningfully to digital transaction and revenue growth over the past year. Beginning in the fourth quarter, we expect both branded digital transactions and revenue to be lower as we have made the decision to move away from one of our partners' account payout business due to low profitability per transaction. While we anticipate a near-term impact on revenue, we remain confident in the strength of our broader digital strategy and growth opportunities across the platform. To help everyone with modeling, this partner contributed about 50% of branded digital revenue growth this quarter.

Turning to our retail business. Overall performance in our retail business was in line with previous quarter on both a transaction and revenue basis. The business remains challenged in the Americas as U.S. immigration policy continues to weigh on our operating results. New migration is the lifeline of our retail business and current migration trends have limited our ability to replenish our Americas customer base. Due to these pressures, we're focused on retaining and expanding our strategic partner base. As discussed earlier this year, we won the Canadian Post partnership, and I'm happy to share that they went live in September, and they're already making a difference.

Now turning to our cash flow and balance sheet. We have generated $321 million in operating cash flow year-to-date. This is down 21% versus last year, driven by our lower net income. Year-to-date, capital expenditures were $130 million or roughly 30% higher than prior year due to signing bonuses associated with recent agent wins and renewals. As discussed earlier, we expect CapEx to be roughly $190 million this year due to the new strategic partnership wins as well as a higher renewal cycle.

Moving to our balance sheet. At the end of the quarter, we had cash and cash equivalents of $1.1 billion and debt of $2.9 billion. Our leverage ratios were 3.3x and 2.0x on a gross and net basis. Our debt and cash balances include a $400 million in commercial paper that we took out in July in anticipation of closing Intermex. Without this balance, our gross leverage ratio would have been roughly 3.0x.

In the quarter, we've returned over $70 million to our owners via dividends. As we mentioned last quarter, we have paused our buyback activity to support our goal of maintaining a debt-to-EBITDA ratio of 2.5x to 3x.

Now moving on to our 2026 outlook, which assumes no macroeconomic changes. Today, we're presenting our guidance this quarter, both with and without the acquisition of Intermex closing by November 10. Based on our performance to date, our views on the remainder of the year and if the acquisition of Intermex is able to close on November 10, we expect adjusted revenue to be in the range of flat to plus 1%, inclusive of the Intermex acquisition. Excluding Intermex -- excluding the Intermex acquisition, our organic business is expected to be down in the range of minus 2% to minus 1% this year, with Q4 slightly lower than the first nine months of the year due to the impact of exiting account payout transactions with one of our Saudi partners, which will affect our branded digital business. We also expect softer consumer services revenue in the fourth quarter due to softness in our travel money business and our retail money order business. Our adjusted EPS for the full year, we believe, will be in the range of $1.28 to $1.38. This is an improvement over our original guidance of $0.03.

Before turning the call over to the operator, please understand that we'll be limited on what we can say in regards to the Intermex transaction. We are actively working with the state of California regulators to continue to try and reach a resolution. We do not plan to give any additional color other than what we stated in the prepared remarks.

Thank you for joining the call today. And operator, ready to take questions.

[Operator Instructions] Our first question comes to us from Darrin Peller at Wolfe Research.

Let me ask you first, just a bigger picture question just post the election, obviously. I mean, I suppose we'll see what may change from a legislative standpoint, whether it's immigration related or not. But do you believe you have the infrastructure prepared in case we do see a greater influx from an immigration standpoint? Anything you would have to change from that standpoint to see the tailwinds that could come?

And then just as a side question, I'll put them both in one. The digital side of the business, when I look at trends, it continues to show, obviously, the impacts of some of the white labeled offerings. I'm curious what the core -- if you could just characterize the strategy on the core westernunion.com branded offering, what the latest developments are there to see that growth really move in the right direction?

Thank you very much for the question. The first one is quite easy. The good news is it turns out we have relatively significant excess capacity, particularly in the Americas, particularly in our retail business, given the mid-teens declines that we've seen in that business over the course of the last 18 to 24 months. So we stand ready for any change that might happen and tough for us to say, but any change that might happen that would lead to a different stance on immigration and potentially a different flow of migrants and immigrants as Matt was talking, the net negative immigration that's transpired over 2025 and 2026 has been difficult for our business, particularly our retail business.

With regard to our core digital business, our core digital business continues to be focused on serving our customers across the 54 countries around the world where we are licensed and have a digital presence. We are in the process of rolling out a much more digital native, digital-first platform and application, as I highlighted in the prepared comments. We're also thinking about how we rethink potentially our stance in the Middle East. We recently made an investment in a minority share of a partner in a Middle Eastern country so that we can gain greater control and launch a digital wallet in the region. We're also looking at other partnerships potentially in Saudi Arabia, where, again, it could be less of a transactional model that we exited and more of a partnership model given the strength of the Western Union brand and payout network that some other partners might see value in. So we remain optimistic about the overall strategy and the approach and expect to see the benefits of the rollout of the Beyond platform here as we go into 2027.

Our next question comes to us from Tien-Tsin Huang at JPMorgan.

Just on the -- you're working really fast on the cost side. So if I heard correctly, now $80 million in run rate savings from the original $50 million you targeted. Just curious where those savings were found. Any revenue risk that might come with the changes? Any other detail you can share would be great.

Tien-Tsin, thanks for joining the call. Thanks for the question. That $80 million is split across a couple of different fronts. As Devin talked about in the prepared remarks, we have done an early retirement program, which really touched a small portion of lots of different teams across the North America platform that helped folks accelerate their retirement. That's providing a fair bit of that number.

The other big chunks that we have is we did a restructuring program where employees are currently leaving in the last six weeks into the remainder of the year that's got a heavy impact on the technology and product departments. When we looked at those functions, we're seeing a meaningful impact and a benefit of AI and the ability to streamline that work and some further benefits coming as well as our operations center.

You've heard Devin talk now for the last probably three, four years of it, we continue to improve on our operation centers and how many calls we get per transaction, and that's continued to provide volume and benefits. We don't expect any meaningful impact on our ability to go forward. We've ring-fenced all the investment areas, and that's our objective as we move forward.

The one place, and we talked about this in the last quarter, we did make the decision as we transition now to the Beyond platform to shut the last generation digital wallet platform that we had in Europe. There is a small amount of revenue associated with that, that Matt can delineate. But it really was a way to get ahead of the rollout of the new platform, consolidate and save a lot on the tech infrastructure side. And so the trade-off on that for a little bit of revenue that we were going to lose, I think, we deemed as worthwhile.

Perfect. Understood. So just my follow-up question, just thinking about the -- what's coming in and coming out. I understand the Saudi change. You got the Canada Post ramping that started in September. Can you remind us of any other addition subtractions in terms of agents or deals, partners that can change things sequentially or month-to-month here as we exit the year?

There's no other big rocks. We are proud that we've been able to renew Publix here in the last couple of months, which is a continuation. But from a things coming in or things going out other than just macro and continued improvement in our business, there's no other big rocks in Q4.

We did win Deutsche Post, which is still scaling.

Still scaling, yes.

So as you know, we had left Deutsche Post three or four years ago. We won them back as an exclusive agent in Germany, which is one of the opportunities for us as our footprint was quite reduced after the exit of Deutsche Post. And so we're now building that back much more in like an independent agent model with actual local post offices. So it's a little slower to scale, but it will be more sustainable over time as kind of an independent network in Germany.

That's a ramp light switch.

With Verizon's Total Wireless. So Verizon has 3,000 locations in their total wireless brand. It's a value brand. We went live with them both there and in a digital offer. So we're being included in new Verizon Total Wireless value packages with a fee-free transaction for Western Union. I believe, and I'll look to Matt. I think we've gone live with about 850 retail locations through the end of October with the goal to get to 1,000 by the end of the year and then continue to ramp that across their network in 2027.

Our next question is from Timothy Chiodo at UBS.

I was hoping we could just circle back a little bit to the large Saudi partner that you mentioned, the exiting of the business. Just to make sure that, that's a completely unique situation. Maybe you could just put a little more color around maybe some of the unique aspects of either the variable costs in that market or the competitive landscape just to get comfort that this is more of a one-off than something that there might be a few others that are similar.

Tim, thanks for joining the call tonight. Saudi Arabia is a very unique market. As Devin talked about in the prepared remarks. It's a very thin margin. There's lots of tie-ups between agents and directly to countries. We partner -- we have our investment in that country with a partner there called STC, which we've talked about now for the last five, six years. We've got a couple of small partners. And this one, we've been talking about for probably five or six quarters highlighting the benefit to our branded digital business. For most of that time, it was low margin but very successful in ramping, and we were happy with the partnership. That started to change here as we got into Q3 with the PRI change, the incremental working capital challenges that ultimately made them pivot to being more of a -- something that does not make sense go forward. Don't have any others that would fall in that same spectrum of very low-margin businesses that are large that we're watching and worrying about.

I think the other thing that's relatively unique about Saudi, it's true in much of the Middle East, and it goes to my prior comments. These are countries where it's quite difficult for a player like us to have a license. And so where we don't have a license, we're much more dependent on partners and therefore, sharing economics with those partners in some way in which to -- as they actually own the compliance risk and the customer account given it's their license. And so that's not true in most of the rest of our digital footprint in the world. I actually can't think of anywhere outside of the Middle East, it's true at all. So again, it's a very limited business model in that region and in particularly dominant in that country, which is what led us to the investment partnership with STC because it's just a tough problem to solve.

Our next question comes to us from Nate Svensson at Deutsche Bank.

I wanted to ask on North America and the U.S. in particular. I guess first part of the question, I get the point that the top of funnel and immigration flows in the country is still pressured, but you've talked a lot about retention and improving that over time. So I was hoping for an update on how retention in North America and the U.S. specifically has trended in the third quarter.

And then the follow-up related to that, you had mentioned some corridors that maybe were starting to look a little bit better, and you talked about the potential for this return to growth in 2027. So could you give just more detail on that and what you need to see to get more confident on the return to growth in '27?

Yes. So I would characterize the return to growth based on three things: one, which is, obviously, it would be helpful if immigration flows changed, that would have a probably the most meaningful and short-term impact. The second is to continue to grow our competitive presence in the important corridors of which we're competing and doing well in a number, which I highlighted some of. As mostly at that point, it is competing for share, whether it's in retail or digital, if the net quantity of new customers in the country is flat to slightly declining. And then the third is continuing to win strategic partnerships. And so when we talk about what we're able to do with Canada Post, when we talk about what we're able to do with Verizon Total Wireless. We view ourselves as the leading player in large partnership-based remittance partnerships. And so that pipeline looks pretty good for us, and we've got a great team working to drive more of those deals in, which will help us continue to do well in North America.

The corridors where we're seeing stability and in some cases, growth tend to be more out of the Loca region, Philippines, Jamaica, the Pacific Islands. We continue to see pressure in Latin America, Nicaragua, Honduras, Venezuela, Haiti. And I think that will continue to be pressured while we have these immigration challenges.

Nate, just to build on Devin's point with a little math for you. If you just go back to last year and think about Q2, Q3, Q4, our business for North America or the outbound was down high single digit, very low double digit on a revenue basis. That has improved now to the point of we're about 500 basis points better sitting here today in Q3. You say what corridors are really driving that. Devin highlighted a few of the ones and examples. But even the biggest one in the world, Mexico, we've seen it where it was shrinking, call it, high teens in the high point last year to now it's more of a mid-single-digit, low single-digit range. So we're seeing a meaningful improvement in that space.

Our next question comes to us from Rayna Kumar at Oppenheimer.

Can you talk a little bit about the transaction trends you're seeing into the fourth quarter? And if you're starting to see that stabilization in U.S. retail? And then secondarily, can you just discuss the pricing trends you're seeing in the competitive market, both in your digital and physical retail locations?

Yes. So I think on the transaction trends, we've before seen ups and downs. I think we saw a bit of a slowdown at the end of the third quarter, and we've seen a little bit of a pickup here at the beginning of the fourth quarter in October. And then we've seen a little bit of pickup kind of in late October and early November. I would say Matt had the overall trends right is any given month can go up and down. But over the last six months and over the last 12 months, we've seen steady progress towards stability and in some cases, improving to the point of us believing that at some point in next year, particularly in North America, we could see this thing stabilize and maybe turn into growth.

With regard to digital pricing, look, we see different players acting very differently. There are, I'd say, the major players continue to maintain some discipline in the market. We have not seen, as you can see in the RPTs degradate we have maintained a strategy of remaining market competitive, which was one of the important strategies in '23 and '24 was to go back to being market competitive. And so I would argue that in general, the markets are behaving reasonably rationally, and we've seen the stability in our RPTs while we continue to compete.

Our next question is from Vasu Govil at KBW.

Maybe I'll ask one on the travel money business. I know when you guys made the Eurochange acquisition, that was seen as a pretty attractive growth opportunity. And now we've kind of seen some softness in that business. Just curious what's changed? And do you view this softness as just cyclical and something that might rebound here in the near term or something else going on?

Vasu, thank you very much for the question. I'm going to -- we feel good that we've gotten to the $150 million revenue base as we talked about earlier this year and late last year. This business does come with some higher fixed cost coverage needs than a lot of other parts of our business. As we've cycled through this year, we've seen some pressure with the macros within Europe. As you know, this business is largely a European business for us.

We're still happy with the acquisition. It still surpassed what we expected it to, but the growth rates have slowed. -- we're still open and interested and excited about it, but it will have its ups and downs as the economy moves and people have more discretionary spending.

One of the things that worked out well for us early is winning, again, it's a business that's a little bit like normal Western Union business in which strategic partners, particularly strategic distribution partners play an important role. And so we had won a large grocery store chain in the U.K., which enabled us to have organic growth on top of the acquisition. The team is focused on continuing that, and there's a pretty good pipeline of incremental partnerships that we can add both in the U.K. and across Europe. We continue to expand the travel money offering across our retail footprint. And so outside of the macro, we see the combination of being able to have travel money and remittance in the same location, carrying some of the fit costs, as Matt has described, across two product lines instead of one product line as, again, one of the rationales for the acquisition so that we could take the platform and the capabilities.

We are close to launching a next-generation travel money point-of-sale platform, which will integrate travel money and remittance into the same platform. So we will be able to offer the product across a much broader footprint of Western Union locations. And so that platform which will then sunset the Eurochange platform, I believe, Matt, should go live first quarter of next year, maybe, which will allow us then to expand the product offering at a more rapid rate than we've been able to date.

Our final question is from Jack Evans at Goldman Sachs.

I guess a quick follow-up to Vasu's question. Obviously, you called out several headwinds. Obviously, you talked about Eurochange and obviously, you have the media network headwinds as well and then some of the divestitures or some of the pulling back of several noncore initiatives there. I guess how should we be thinking about the growth profile of CS over time? And do you still see that segment as a double-digit grower over time? Just any commentary there would be helpful.

Jack, thanks for the question. We do -- we are still very bullish about the Consumer Services business. Our aspiration is still to have double-digit growth in that business. Let me talk about a couple of things we're working on that we expect to have some benefits as we go into '27 and beyond. There's two primary ones. Devin spent probably 5, 10 minutes of his prepared remarks on the digital asset strategy. Our Stablecard and our DAN network, both are things that are going to drive overall revenue and help the Consumer Services business as well as we're right now in the process of working on cross-border bill payment.

You heard us talk about earlier today on the call that bill payment by itself is a very beneficial business for us. But the ability to take that and make it cross-border so that people can -- rather than sending your family member EUR 300 or dollars or whatever part of the world they're in and they pay their bills and spread it around, this will enable the sender to actually ensure the money goes where it's supposed to go to be able to do that. We're hoping to have that out early next year or the first half of next year. Both those things should provide some tailwind as we start to move forward.

Got it. Super helpful. And then just a quick follow-up. obviously, a number of pretty impressive partnerships, and it's great to hear that the -- obviously Deutsche Post and Canada Post are going well. Any -- just out of curiosity, any more of these deals potentially on the come, how you're thinking about partnerships, obviously, in the near to medium future. Anything else that does seem like another future growth lever for you guys? Any incremental color there would be helpful.

Yes. So Jack, I would say we've got a strong pipeline. We've got a great team working on it. We have a compelling value proposition. We've made significant investments in what I would consider to be our partner platform. We actually refer to it as partner OS. It allows much more seamless integration, a much quicker ability to connect capabilities such as payout to account. And so we think we are in a pole position for having a modern up-to-date offering and a compelling package with a great value proposition. So we remain bullish about our opportunity to win more, some cases, de novo like it was with Verizon. In some cases, it will be takeaway. So you can look forward to hearing more from us about that in the quarters going forward.

Thank you for joining the Western Union Third Quarter 2026 Results Conference Call. We hope you have a great day.

Good day, and welcome to the Western Union Second Quarter 2026 Results Conference Call. [Operator Instructions]

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 second quarter in our 2026 full year outlook, 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 2025 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. Where possible, 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 Second Quarter 2026 Financial Results Conference Call. In the second quarter, we continued to face significant margin pressures due to the ongoing slowdown in the retail business in the Americas, higher agent commissions and the continued acceleration of our digital payout to account business. The quarter came in $0.06 better than Q1 having eliminated many of the onetime effects we saw in the first quarter. However, the accelerated shift from cash payout transactions with higher revenue per transaction, RPT, and higher contribution profit per transaction, CPPT, and to pure digital transactions continues to weigh on profitability.

On a more positive note, despite the strong macro headwind, our strategy and our significant geographic diversification enabled us to report revenue of $1 billion. On an adjusted basis, this was a decline of only 1% year-over-year. Consumer money transfer transactions grew at 3% in the quarter, which was a 300 basis point improvement from Q1, a 600 basis point improvement year-over-year and the highest transaction growth rate since the second quarter of 2024.

We continue to see quarter-over-quarter improvements as we lap the worst of last year. For example, U.S. to Mexico declined a little over 3% on a transaction basis in the quarter a nearly 1,000 point improvement year-over-year. Yet overall U.S. retail continued to be mid-teens negative on a transaction basis in the second quarter, well below our expectations.

While overall global transaction growth has improved significantly, it is important to know that it comes from lower contribution profit per transaction, which is putting pressure on our margins. Adjusted earnings per share came in at $0.31 in the quarter compared to $0.42 this quarter a year ago. This is below our expectations and is driven by lower profitability in our Americas retail business and lower profitability in our Middle East business as volumes there continue to shift rapidly from our legacy partners in the region to newer digital-only partners at lower RPTs and profitability.

Our branded digital business continued to perform well with transactions increasing by 25% this quarter and adjusted revenue by 6%. While transaction growth continues to accelerate, the revenue growth is being muted by strong growth in lower RPT corridors and a significant increase in digital payout to account which saw 55% growth in the quarter.

As I mentioned in previous calls, our new customer acquisition economics remained challenged in the quarter which impacted the overall revenue growth and profitability of our digital business. We continue to roll out our Beyond digital platform, which I believe will enable better customer experience improve our ability to market at a corridor level and potentially reduce the magnitude of needed new offer incentives.

In Consumer Services, adjusted revenue was up 12% in the quarter, driven by growth in our bill pay business as well as continued growth in Travel Money. Our financial results in this quarter came in below our expectations for the second quarter in a row. This is not acceptable, and we are not satisfied with the current operating performance and we'll be implementing significant changes as a result. While the external macro factors over the past 12 months have undoubtedly accelerated the underlying trends in the business, we recognize that in the near term these trends are not likely to -- are likely to continue at elevated levels.

We have been navigating this mix shift away from payout to cash over the past several years as well as the move from retail to digital through cost savings initiatives and the reallocation of investments. The impact of ongoing changes in immigration in the Americas has accelerated those dynamics, and we must now more aggressively change our cost base to reflect the reality of a future with continued pressure on CPPT.

Over the past 12 months, we have seen the percentage of payout to account and pay out to wallet transactions grow by 25%. This is an important trend that will likely continue to cause ongoing margin headwinds unless we vigilantly reduce our fixed cost base, lower our account payout costs and increase our ability to cost effectively drive digital growth.

We have spent much of the last 8 weeks evaluating what is working across these 3 dimensions and what is not. That process has reinforced our belief that the long-term fundamentals of our business remain intact. Our brand, customer relationships, market position, scale and digital capabilities continue to provide a strong foundation upon which to build. However, a strong foundation alone is no longer enough.

We must accelerate the transformation of our operating model to enable us to maintain our ability to invest in our next-generation digital initiatives while simultaneously significantly lowering our ongoing operating costs. The program we have launched is called Beyond efficiency. It has 5 key program elements, and we will be targeting a run rate operating cost reduction of $50 million by the end of the year.

The 5 key program pillars include: the first pillar accelerate the dual-track strategy by reducing redundancy and streamlining processes that do not align with the Beyond strategy. As a 175-year-old company, we have a lot in the garage. Organizations build up over time and what we're once new ideas or areas investment are now ongoing operating costs with limited or no contribution to the Beyond strategy.

For example, as we move to the Beyond digital framework, we have made the decision to close down our existing digital wallets in Europe, saving the company a run rate of $6 million to $8 million. We anticipate launching our Beyond digital platform to replace those in Europe by the end of the year. The second pillar is to reduce discretionary operations and technology work by 20% that is not directly tied to growing digital. We are targeting a 20% reduction in discretionary operations and technology capacity by the end of the year, forcing a prioritization that will cause only the most impactful initiatives to get work done.

The third pillar is to rapidly adopt AI to drive automation and reduce manual work given our legacy system limitations. We have ramped up our adoption of AI and other automation platform significantly over the past 6 months, and we see meaningful opportunity to eliminate manual work and reduce the friction that results from our large geographically dispersed and highly regulated business.

The fourth pillar is to move to a more aligned operating model. As part of our Beyond efficiency program, we are looking to align people and work closer to the region they support. This will require us to localize what today are distributed global functions. For example, we have been moving agent onboarding for the Asia Pacific region from Lithuania and Costa Rica to our operating center in Manila. This will improve time zone and geographical alignment and reduce unit labor costs.

We anticipate this will improve on all 3 dimensions of cost, quality and speed. The fifth pillar is to reduce the operating cost of moving money. In a world that is rapidly going to digital payouts, we must reduce the cost of capital that we have floating around the system, lower payout costs improve FX rate competitiveness and accelerate real-time settlement through our own digital currency, U.S. DPT. These initiatives are focused on creating a leaner organization while maintaining our ability to invest in the areas that matter most strategically.

Importantly, this is not a short-term exercise, designed solely to reduce near-term costs. Rather, it is a structural effort to improve how we operate and to position the company for stronger, more sustainable profitability in the years ahead. We understand that our investors expect tangible evidence that these actions are producing results. While meaningful transformation takes time, our expectation is that the combination of improving growth and enhanced cost discipline will strengthen margins, improve profitability and increased returns over time.

Our objective remains straightforward, generate consistent growth, improve operating profitability, strengthen free cash flow generation and create long-term shareholder value. I look forward to updating you on the progress of this program in the coming quarters.

Now switching briefly to the macro. As you know, remittances in the Americas have faced meaningful pressure that began in late 2024, driven by the changes in immigration policy. While growth rates have improved meaningfully from the summer of 2025 lows and continue to improve, with U.S. to Mexico, for example, revenue growth rates improving 500 basis points sequentially compared to the first quarter. Retail continues to underperform relative to digital, and that dynamic continues to weigh on the profitability of our Americas businesses.

As we have discussed, the growth in retail business is almost always dependent on new migration. When immigrants come to a new country, most frequently, they transact in retail out of necessity, given cultural and language issues, lack of access to digital funding and often heavy cash remuneration. When migration goes negative like we have seen in the U.S. and around parts of the Latin American region, it becomes difficult to replace customers that migrate to digital channels, find alternative options or leave the country to return home. This doesn't mean the retail business can't improve like we have seen over the last several quarters. It just means it will be difficult to get the business back to true growth without a meaningful change in immigration policy or much more aggressive gains in our market share.

We do believe we can take market share, and we should start to see the benefits as Canada Post and Deutsche Post ramp-up, which will provide a tailwind starting in Q3 and continuing in 2027. We also recently launched an industry-first partnership with Total Wireless a Verizon value brand that combines wireless connectivity and cross-border money movement. The partnership expands our reach into the telecom channel, providing access to millions of subscribers through thousands of retail locations and extending our distribution footprint across both digital and retail channels.

Recognizing that consumer behavior continues to evolve and digital engagement is becoming increasingly important across every aspect of the customer journey. We believe our digital-first strategy and our digital platforms represent the most attractive growth opportunities over the long term. Over the last couple of quarters, we have seen substantial gains in the Middle East, while our digital business in other parts of the world has plateaued.

We spoke on the last couple of calls about needing to better manage promotional offers in places like the United States and Europe. And as such, we have begun to pull back. While the benefits of this more disciplined approach are not immediately obvious in this quarter's results, in the last few months, new customer growth rates have improved and have done so at higher RPTs which should bode well for better revenue and profitability in future quarters.

That said, pulling back on new customer incentives is just one element of our revised approach. Since our Investor Day, we have been executing our digital acceleration program along 3 axes. The first is the restructuring of our digital go-to-market model and team. We have now completed the restructuring of our go-to-market team, moving digital team members into the regional operating units that they support. This now brings decision-making and local market knowledge together in one team. We have also been adding new senior digital talent with sector expertise across the regions.

In particular, I would like to welcome Shishir Singhania who joined us last quarter as our new Chief Digital Officer, leading the global digital product team and the North American go-to-market team. Shishir brings deep knowledge and experience to us and has already begun to make material impacts.

Second, we are accelerating our Beyond digital platform. Having now seen early returns, we are accelerating the rollout across our major markets with planned launches in Australia, Europe and the U.S. before the end of this year. We are expecting the Beyond digital platform to enable us to improve new customer onboarding success rates and thus improve the return on new customer acquisition in these important markets.

We continue to target rolling out the Beyond digital platform to all of our major markets by the end of 2027. Third, we are focusing on investments by corridor. Our analytics and insights have improved, and we've begun to differentiate our level of new customer investment in both marketing and new customer incentives at the corridor level. This higher level of fidelity and targeting, we believe, will enable us to earn better returns on the same overall investment pool. Even if it means slowing down in some larger corridors where competitive dynamics inhibit strong returns.

Before I turn the call over to Matt, I would like to discuss further, a few minutes to provide an update on our digital asset strategy and the progress we are making. At the center of this strategy is US DPT our U.S. dollar stablecoin. US DPT is designed to maintain a one-to-one value with the U.S. dollar and is backed by reserves, including cash and U.S. treasury instruments.

First, we successfully launched USDPT in May of this year, which established the foundation for a regulated digital dollar that can support payments, treasury operations in customer use cases across our global network. USDPT is now live and available through an expanding ecosystem of exchanges, financial institutions and partners. With the first 4 exchanges now live and actively trading USDPT.

Second, we have introduced our treasury bridge solution which utilizes USDPT to support more efficient movement of liquidity and capital across our global network. This initiative has the potential to enhance funding flexibility, improve settlement speed and reduce reliance on the traditional correspondent banking infrastructure. We are testing with multiple counterparties to use USDPT as a form of settling our cross-border money transfer transactions.

Third, we launched the Digital Asset Network, or DAN, which extends Western's Union's unique global distribution capabilities to the digital asset ecosystem. Through DAN, digital assets, exchanges and other partners can connect to Western Union payout infrastructure enabling customers to convert digital assets into local currency and access funds throughout our global network. This creates a bridge between the rapidly growing digital asset economy and the real world economy that customers can use every day.

We have successfully launched our first partner and we expect the launch of several more in the coming weeks with the goal of having tens of millions of consumer digital wallets connected to our digital asset network by the end of the year.

And lastly, we continue to advance our consumer proposition with the development of our USDPT powered wallet and card capabilities. Our vision is to provide customers with the ability to redirect remittances, hold the USDPT digital dollars and spend them through a payment card seamlessly transitioning between digital assets and traditional financial services.

We are launching the USDPT stable card today. We view the digital assets as an opportunity to expand our TAM and to free up capital. Our objective is simply not simply to participate in the digital asset system, our objective is to leverage Western Union's trusted brand, regulatory expertise, global reach and distribution network to become a critical infrastructure provider within that ecosystem. What differentiates Western Union is that we are focused on real-world utility. We are not building speculative products. We are building solutions that address practical agent and customer needs, faster settlement, lower friction, improved accessibility and broader financial inclusion.

While we remain in the early stages of this journey, we are encouraged by the momentum we are seeing, we have moved beyond strategy and are now into execution. 2026 will be a foundational year for our digital asset initiatives. We have successfully launched the core building blocks of this ecosystem and our focus now shifts towards execution, adoption and scaling.

We remain confident that digital assets, stable coins and block chain-enabled payments can become meaningful contributors to Western Union's future growth and reinforce our mission of making financial services accessible to people everywhere.

Before I conclude, I would like to give a quick update on Intermex. We remain actively engaged in discussions with regulators on the final approval. I remain optimistic that we will be able to obtain the outstanding approval needed. This would enable us to close the transaction upon receipt of this approval as well as satisfaction of other outstanding and customary closing conditions.

In closing, while we are disappointed with our current results, we remain confident in our ability to improve performance and unlock the value that exists within this business. The path forward is clear. We are focused on driving growth through our digital initiatives, improving efficiency throughout the organization, allocating capital with discipline in executing against a well-defined strategic plan.

We recognize that rebuilding momentum requires patience and execution. However, we believe the actions that we are taking today will position the company for a stronger future. We appreciate the continued support of our shareholders and the dedication of our employees who remain committed to serving our agents and customers every day. While there is significant work ahead, we are focused on delivering the results that our stakeholders expect and deserve.

Thank you. And I now turn it over to Matt to review our financial results in more detail.

Thank you, Devin, and good afternoon, everyone. I'm going to walk you through our 2026 2nd quarter results in more detail and our 2026 financial outlook. In the second quarter, GAAP revenue was $1 billion, which on an adjusted basis was down 1%, a meaningful improvement from down 5% last year. The decrease was driven by continued slowing of our Americas retail business while our consumer services and branded digital businesses grew 12% and 6%, respectively. Adjusted operating margin was 15% in the quarter, which was impacted by lower revenue from our retail business, mix, higher agent signing bonuses and higher operating expenses.

As Devin said, we are clearly not satisfied with our performance of our business this quarter, and we remain committed to driving higher operating profitability. We are in the process accelerating our operational efficiency program beyond efficiency with the goal of taking out $50 million between now and the end of the year and $200 million of run rate by the end of 2027.

The drivers of our Beyond efficiency program will be the 5 elements that Devin discussed earlier, which includes the additional scale that we'll get from our Intermex acquisition. Adjusted EPS was $0.31 in the current quarter. Adjusted EPS in the current period was driven by lower operating margin for the reasons I stated previously, offset by lower tax rate in the quarter. Our adjusted effective tax rate in the quarter was 14% compared to 16% in the prior year. The decrease in adjusted effect tax rate was primarily due to discrete expenses in the prior year period.

Now turning to Consumer Services business, which contributed 15% of total revenue in the quarter compared to 6% in 2022. Second quarter's adjusted revenue increased 12% driven by the growth of our consumer bill pay business, Travel Money business as well as the addition of check cashing. As a reminder, the current quarter marks the anniversary of our EuroChange acquisition, which was acquired on April 1 of last year. The Consumer Services segment's profitability was lower in the quarter, driven by lower operating profits in our Travel Money business, lower float income in our retail money order business as well as the delayed reduction in overhead due to the acquisition we made of a check cashing partner that we had planned to integrate with Intermex.

Now transitioning to our consumer money transfer or CMT business. CMT transactions grew 3% in the quarter relative to a year ago. This was driven by continued strength of our branded digital business, which delivered 25% transaction growth in the current quarter. While retail trends in the Americas remained under pressure, the ongoing shift of digital continues to support the overall transaction growth and customer engagement.

CMT adjusted revenue declined 3% year-over-year, reflecting the continued pressures in the Americas retail business, driven by uncertainty in the U.S. immigration policy. But this was a 300 basis point improvement relative to the first quarter of this year. The CMT segment's profitability was lower in the quarter due to revenue mix including declines in cash payout transactions, offset by lower profitability from digital payout transactions, which increased, higher commission costs associated with new partners and renewals and higher operating expenses.

In the second quarter, our branded digital business grew adjusted revenue by 6% and transactions by 25%. This marks the 11th straight quarter of solid revenue growth. Consistent with the recent trends, growth was increasingly driven by our Middle East partnerships. While these channels continue to expand our reach and support volume growth, their economics differ from those of our traditional license business, resulting in a more pronounced gap between transactions and revenue.

We continue to view this as a strategic trade-off that supports the long-term expansion of our digital platform. As a reminder, we began to ramp the Middle East partnerships in late Q3 of last year. So we expect transaction growth rates to moderate as we anniversary these partnerships. Account payout transactions also continued with a strong momentum, growing at 50% in the quarter which is the strongest quarterly growth rate in several years.

Turning to our retail business. Overall, the performance of our retail business was in line with previous quarters on a transaction basis, and a few hundred basis points better on a revenue basis. The business remains challenged in the Americas as U.S. immigration policy continues to weigh on our operating results. New migration is the lifeline of our retail business.

With borders closed, it is difficult to offset natural attrition that comes from digital migration, industry competition, and reverse migration as consumers return home to their native countries. Looking ahead, we remain focused on strengthening our retail franchise with new agent relationships a vastly improved platform and better consumer experience.

Now turning to our cash flow and balance sheet. We generated $214 million in operating cash flow year-to-date, up 45% versus last year, driven by lower cash taxes. Year-to-date, capital expenditures were $88 million or 65% higher than the prior year due to signing bonuses associated with recent agent wins and renewals.

As discussed in February, we expect CapEx to be roughly $200 million this year due to new strategic partnerships as well as a higher renewal cycle. Moving to our balance sheet. At the end of the quarter, we had cash and cash equivalents of $920 million and debt of $2.7 billion. Our leverage ratios were 3x and 2x on a gross and net basis. As we announced a few weeks back, we extended our delayed draw bank facility until November. This preserves the financial flexibility while ensuring that we have the committed funds in place to support the Intermex transaction.

As a result, post closing, we expect our debt-to-EBITDA ratios to be elevated by historical levels. In the quarter, we returned over $80 million to our owners via dividends and stock repurchases. We have decided to pause our share buyback program in order to maintain our debt-to-EBITDA ratio of 2.5x to 3x.

Now moving to 2026 outlook, which assumes no major macroeconomic changes. Based on our performance year-to-date and our view on the remainder of the year, we are updating our 2026 guidance. We now believe adjusted revenue will be in the range of 4% to 6% revenue growth, inclusive of the Intermex acquisition. Our outlook assumes a September 1 close. From a modeling standpoint, we expect retail CMT to continue to improve throughout their back power this year.

Digital CMT to be in a similar ballpark of recent quarters and Consumer Services to grow low single digit as we lap the EuroChange acquisition as well as the ramp of a large travel money partner as well as rightsizing our underperforming products that Devin talked about earlier.

Our adjusted EPS for the full year, we believe will be between $1.25 and $1.35. We expect the second half EPS to be better than the first, driven by new agent wins, back half seasonality, better revenue mix and the accelerated pace of our beyond efficiency program.

Thank you for joining the call today, and operator will take questions now.

[Operator Instructions]

Our first question comes to us from Tien-tsin Huang at JPMorgan.

Thanks. Always good to catch up with you. So Yes, detail here. Thinking about the revenue, we pretty much in lock with that. But obviously, the profit on the cost front. Is it really the aspect mixing digital there's a lot of. I'm just trying to summarize it a little bit easier. Can you give us a little bit more there?

Yes, absolutely, Tien-tsin. You broke up a little bit there, but I believe your question was, can you give a little more on the cost side and what's going on there. Is that correct?

Yes,.

Perfect. Yes, happy to drain that a little more. Just a reminder, I know you know this, but our Q2 margins and adjusted EPS were 200 basis points and $0.06 better than Q1, but it's still a far cry from what we expected. Also, I'm sure, as you know, last year, we were able to reduce our cost of sales expenses by 3% in SG&A by 14, which helped us fully offset the revenue decline last year and help us grow operating income.

As you dig into this -- there's really 2 major drivers that really stick out that we should talk about. One is the pace of our cost reduction. This has slowed from the reason I want to give you a context of last year. It slowed from where we were last year. We were able to rightsize many different departments, exists some programs in the first half of the year, that's gotten a little harder. We do have a very good strong pipeline, as Devin outlined, the beyond efficiency program, which gives us confidence that over the rest of this year and going into next year, we can exit with a run rate savings of $50 million and $200 million.

The other part of it is revenue mix. We've seen a shifting of to lower contribution profit per transaction. I'll just give you a couple of examples. We're seeing the acceleration of our cash payout to digital in both the U.S. and the Middle East, both accelerating. And we see higher profit dollars per transaction from cash payout versus account payout.

We're also seeing different results between quarters. You know this business is made up of tens of thousands or thousands of corridors and the economics very massively from each one. As you heard Devin talk about we've seen quarter-over-quarter improvements for U.S. to Mexico, which has also been talked about by the Banco Central Bank of Mexico.

We've also seen improvements in U.S. to U.S. and U.S. to Canada. -- but we've seen a deterioration quarter-over-quarter of U.S. really to the rest of the world. There's a few spots were shining. But as you know, the yields vary between the different corridors the improvements we've seen in U.S. Mexico come in a corridor where there's lots of competition, and the yields are much lower relative to the rest of the world, we have a much higher yield, and that's putting pressure on us.

The other thing that's helped us grow and have some improvements in U.S. and Mexico is we've had some regional agent wins over the last couple of quarters that have ramped as the quarters have gone on. These have come at higher commissions per transaction to win them, but they are still very profitable deals and things we're excited to have. We talked about 1 of them earlier in the year with Vallarta, which is principally focused on customers that are Latin America based with a very heavy concentration of Mexicans.

Okay Okay. Maybe just as a quick follow-up, the cadence of the $50 million then. So you're going to take the cost structure here, how quickly would that be realized? And how much do you need to intimates on time to put factor?

So I -- it will ramp throughout the rest of the year. I'll use the example Devin gave in his discussion earlier. We made the decision to turn off the European wallets because the more modern platform is better and will help us free up costs immediately that benefit will start helping us in Q4. There's a migration time for the customers who are in the platform, turning off the attack cost and all of that. So the actions we're taking will ramp as the year progresses, and that's why we try to get to a year -- exit rate of $50 million, and then next year being the $200 million.

Next question comes to us from Will Nance at Goldman Sachs.

I just wanted to maybe circle back to the mix shift in the transactions that you're seeing in the quarter. I mean if I'm hearing correctly, it sounds like from a revenue perspective, the kind of the improvement in some of the larger corridors have offset deceleration in some of the other quarters. And then when you look at the contribution margin per transaction, the accelerating quarters are just lower than the decelerating corridor.

So I guess I just want to make sure we understand that dynamic, but maybe more importantly, it seems rather sudden the acceleration in some of that mix shift that's happened. And so I'm just wondering if you can point to anything specific that's driven that acceleration because it does seem to be happening at a really accelerated pace for your comments and -- and I guess for some of the numbers that we're seeing in terms of like gross margin this quarter?

Yes, Will. So it's really a combination of a couple of things, just pulling the thread on what you just asked for. Retail is very profitable, particularly cash payout. We've now been going on 6, 8 quarters of pressure on that in a -- in the U.S. side, we've been having double-digit declines there for going on about 6 quarters. That compounding effect is having some pressure. On top of that, we have been able to make progress on it from a transaction revenue standpoint with some of the wins we've had. Those wins have been in the ballpark of our other strategic partners or the example I just gave to Tien-tsin on the regionals but they're at the upper bounds of what we have for partners. So it's putting pressure on commission cost per transaction, but still helping us to grow revenue and prop up the profit.

Well, I'll give you another example, which to your point, has even surprised us. So most of the world, principally from the U.S. and Spain, but most of the world to Colombia. The shift that has happened from what was traditionally a very significant payout to cash business for us to pay out to account in Colombia, but more importantly, pay out to a wallet there called Nequi wallet and the shift to the use of their real-time payment system, Bre-B, has truly been amazing at how quickly this has happened. And so we were fortunate that we were enabled into the Nequi wallet, and then we enabled Bre-B will remember, probably in the fourth quarter of last year, first quarter of this year.

So we've been able to capture some of that, but the shifting -- the volume has been shifting and that shift has been significant economically because the economics of paying out to a digital wallet in -- over a real-time payment switch is far different than the payout to cash economics in the same country, in the same corridor.

Got it. That's helpful. I appreciate that. And so maybe just following on that last bit. Is there any way to decompose like the extent to which these payout to account transactions are less profitable than your retail business? How much of that do you attribute to just the structural differences in profitability in the transactions versus maybe things that are more under your control and your ability to improve the margin structure, build scale in some of these digital payout channels.

I guess I'm trying to say like how much can you close that gap between your digital payout and your cash payout channels.

Will, thank you for the question. As you know, the yields and the pricing, the profitability vary massively from quarter-over-quarter. So we can give some generalities. But the real pressure here is we're seeing vast majority of our branded digital growth coming from our Middle Eastern partners, which come a very, very low revenue per transaction, thus very low profit.

So that's causing part of this. As we -- Devin talked about in the prepared remarks, we've strengthened the team through multiple elements of new people, some of the things we're putting in place, the go-to-market. They're taking it from -- to market to our customers. As those things take hold, which we're starting to see early glimmers of this with getting revamping our core branded digital customer growth, that will help us grow more profitable branded digital in lots of countries.

So really it's being driven by the fact we Middle Eastern partners are very low RPTs and profit per transaction. Beyond that, you also have just the mix, which varies because we have some corridors where digital payout might be a little higher. So it's hard to give any other than just generalities. The key for us is we've got to get the overall growth humming and then see and drive improvements in the Americas from a retail standpoint.

And so what I would add, Will, right, if you remember, and it's generally -- again, Matt's right, it's quarter-to-quarter. But in general, as a percentage, digital transactions are roughly margin-wise similar to retail transactions. Total dollars, and as I was talking about, contribution profit per transaction is reasonably different. And so when you start substituting the retail transactions, the digital payout transactions, like I was talking about in Colombia, that's where you start to see some of the margin pressures that we're seeing.

We do have 2 levers that we're working on. Matt highlighted one, which was growing higher revenue and higher contribution per transaction particularly in our digital business. The second, the team is working on quite aggressively is lowering digital payout costs. So many of our digital payout partners and networks were negotiated 2, 3, 4, 5 years ago in some cases. Some were part of our retail network, and we use them as payment switches to reach other banks or other wallets. And so we're in a pretty active campaign.

And if you remember, we talked about at Investor Day, our goal of lowering those payout costs. This has brought that more to the forefront. And we will share in upcoming calls the progress that we're making. And that Columbia example, the team recently lowered the payout cost from over $2 to less than $0.50, right? And so the contribution per profit on those Nequi Wallet is going to go up dramatically. But previously, we saw a lot of volume shift, and we were paying similar payout costs as we did to other options in Colombia, even though they had lower revenue per transaction because they were digital.

Our next question comes to us from Rayna Kumar at Oppenheimer.

Just given the current possibility pressures and broader business headwinds, how are you thinking about the sustainability of the current dividend over the medium term?

So I will start, and then I will let Matt follow up with the math. We believe and the Board of Directors believe that the dividend is a strong return to our shareholders, and we believe we have sufficient financial capacity to continue and maintain that dividend. So at the present moment, we believe the strategy of continuing to return capital to our shareholders via the dividend is a good strategy.

And just to build on that a little more for you, Rayna. As you know, we've got over $900 million of cash on our books. We talked earlier about the benefit we expect to be able to get out of US DPT is we're able to go get the treasury bridge ramped up. We're working very fast on one of the largest 3 markets in the world, which we hope to have a large partner Board by the end of this year and then ramping over $1 billion of float in the first quarter of next year. That will start to free up capital from both the correspondent banking process as well as we prefunded to some of our partners around the world.

So we feel like we have line of sight to improve cash flow. And as Devin talked about, our Board is committed to the dividend.

[Technical Difficulty].

So what I would call it is a continuation of the policies and the effects of the policies that we've seen for a year. But as we've seen both in our financial results and in certain places, the effects of that have stabilized at a certain level. And so we continue to see the negative effects of it but it is no longer worsening and in some cases and in some places, it is abating a bit that is happening, however, slower than we anticipated at the beginning of the year.

We believe that by the time we lap the effects as you know, the real impacts on the policy started at the end of the first quarter of 2025. We felt the ramp in the second quarter of '25 and really peaked in the third quarter of '25. We felt by this time of the year, we would be seeing the effects of lapping those things and more stability than we have. As noted earlier on the call, we also see varying effects by corridors. And so when you have a policy change with regard to -- or you have a event in Venezuela, those are important corridors for us that will be impacted while we're seeing more stability in corridors like U.S. to Mexico.

And so again, this comes back to a corridor-by-corridor basis what policies are affecting what groups and how does that impact our customers and the mix of our customers in those corridors. But the overall effect is improving from the lows of last year but not improving as significantly as we might have anticipated.

Our next question is from Darrin Peller at Wolfe Research.

All right. Look, you've obviously done well with growth in your branded digital users as of many of your competitors also. But our customer acquisition cost for branded digital now higher to the degree that it's impacting incremental profitability. I guess I'm just trying to figure out also beyond managing expenses, can we just revisit the opportunities to expand ARPU beyond just trying to create more customer growth itself.

Beyond digital, where are you in that? And what do you expect to see in terms of revenue per user expansion over the coming year or 2?

So let's tackle those in 2 parts. First, on the customer acquisition, we started talking about this probably 2, 3 quarters ago. As the retail business began to see significant declines, competitive intensity in the digital business increased. And the competitive intensity, which was historically driven more by marketing spend and by kind of brand recognition also started to develop new customer offers. And in some cases, relatively significant new customer offers there are market -- there are offers in the market where customers can get free transactions for a month or they can get 3, 4, 5 free transactions as a new customer. These kinds of offers have a significant negative effect on near-term revenue as you onboard those customers.

We participated in some of that for a while. And then as I noted in the public commentary, have begun to back off on some of that simply because we did not see the longer-term returns given the impact on near-term revenue that has required in order to compete on that.

The second question in terms of ARPU, we continue and one of the things I talked about in the corridor is focusing on basically our CAC to LTV. And in particular, LTV is driven by customer behaviors in terms of longevity transactions for customer and principal per customer. And so us and others in the industry are very focused on where are the most valuable customers, the higher senders, the more frequent centers so that you can really optimize that revenue per transaction.

More importantly, you can optimize the LTV, also the revenue and profit over the life cycle of the customer to focus those acquisition dollars in places where we are getting higher returns on a life cycle basis than an individual transaction economics that we might acquire the first or second transaction.

All right, A quick follow-up just on Intermex. I know it's delayed, obviously versus your prior expectation, but sort of could you still expect the same financial synergy targets just in a delayed time frame as you previously expected?

Yes. So ultimately, as we get closed, we do expect to have actually higher synergy targets, as you probably remember, when we kicked this off a year ago. We had anticipated $30 million in synergies. We talked last quarter that we are receiving more opportunity and expect it to be up a little bit. That continues to be the case. It will ramp post closing. The year has gotten narrower.

As I've mentioned before, we've got in our model now is at 1 close. I can't tell you we're going to close on September 1, that the regulatory approval. I just wanted to make sure you all knew what day we modeled in our numbers. So there will be some synergies this year, but what we expected originally was $0.10 in the first full year when we talked about in August of last year. We would still expect that plus some.

Our next question comes to us from Nate Svensson at Deutsche Bank.

Another one on margins. So I understand the points on kind of OpEx and shift in transactions. But a couple of other factors that have come up on the call, I wanted to touch on. So on the higher agent bonuses, I know you mentioned the agents in Mexico, but wondering if that same dynamic is playing out in any other regions -- is there any reason to think that the cost that you're having to pay out for these agents is structurally higher now than it has been historically?

And then the other thing that came up in the prepared remarks was travel money operating profit being lower. So I wanted to hear some color on what was driving profitability and Travel Money lower specifically.

I'll work my way backwards. So on the travel money side, as we talked about last quarter, the first quarter of every year, they actually lose money because their fixed costs are higher than the revenue because it's a lower seasonal travel business. Typically, all the profit comes in the second, third quarter. They're slightly positive in Q4. What we've seen this year is that travel is down and Europe, in particular, if you go look at Heathrow travel patterns you're seeing it be negative for the first time since COVID.

So we're seeing less consumers coming in, which has put some pressure on the profitability of that business. It still grew, as you can see, it was a contributor to our 12% growth rate this quarter, but it's got -- it wasn't where we expected to be. It was light a bit.

On your first part of your question about what are we seeing for signing bonuses or overall agent economics. It varies from partner to partner. But as I've mentioned a couple of times now, and we had talked about with the $200 million of CapEx this year, it's a heavy agent renewal cycle. We've talked about winning 2 new big partners, plus a couple of more moderate ones. We've signed up the Deutsche Post in Europe, which is ramping right now. We've won and it's a competitive takeaway.

We won the Canadian Post, which we'll be ramping here in the latter part of Q3 both of those have some upfront costs to ramp and help build them out, which have -- and they are slightly higher end of our typical strategic partners. They're not above the range, but they're at the higher end because of competitive takeaways. And then we had the more smaller ones like a Vallarta or some of the other ones like that, that were also competitive takeaways are at the higher end.

I would add that. I have talked about this that we went through a renewal cycle, particularly here in North America with the majority of our strategic partners. And one of the crown jewels of the Western Union franchise is the majority of major retailers, whether -- and we are proud of these relationships, whether it be Kroger, Walmart, Albertsons, Wallgreens Publix, HEB, Giant Eagle, we have the majority of what we consider to be the strategic distribution in the U.S.

As you can imagine, and we faced an unusual number of renewals over the past 12 months that we successfully have gotten through and I'm pleased to have renewed all of those contracts. In the face of a down market and in the face of my commentary around one of the ways you deal with a down market is you work to steal share. We had some increased competition looking to lodge us from some of those long-term relationships.

And so I think the team did an excellent job of navigating, getting the renewals, continuing to secure those relationships and doing it at economics that weren't too different from the ones that we had previously.

That's super helpful. For a follow-up, I did want to ask on remittance taxes more broadly, not on the federal side, but I know there are some other local or state proposals floating out there. I know Tennessee is 1 that comes to mind. So on Tennessee specifically, wondering if you could give your thoughts on that specific proposal, whether you think it gets implemented. I know there are some challenges out there on that one specifically. And then any other state or local taxes that we should be tracking that could potentially be on the horizon?

Yes. As you know, when they passed the U.S. remittance tax, which in our previous commentary, we don't believe had a significant impact it has driven up card acceptance. I will make this up. We're now at 20-plus percent card acceptance in the retail network in the U.S., up from a couple of percentage points before the remittance tax.

So we've seen a lot of move to people using bank products to not pay the tax as was written into the legislation. But they left open the door for states to in effect, pass a state-specific tax, of which several Tennessee being probably the most notable and aggressive have done so. There have been a couple of states that have limited those taxes to what they consider to be foreign adversaries or specific corridors that they saw or countries they saw as problematic.

We track this stuff if I could predict it, I probably wouldn't be in this job. We don't think we will have significant impact. Tennessee is an important state. But as you can imagine, it's nothing like a Florida, Texas, California, New York in terms of the magnitude of the business that we have there. And in many cases, customers will simply across the border and send money out of Western Union in a different state if the tax equation becomes significant between one state and another.

Our next question is from Timothy Chiodo at UBS.

I want to go back to really the opening comment from the prepared remarks, and we've hit this in a few different ways, but maybe we can try another way. So retail and digital, and you were very clear that the contribution dollars the contribution profit per transaction is lower for digital. And you kind of mentioned meaningfully so.

The first part is I was hoping that you could -- maybe just talk a little bit about that directionally in terms of how much meaningfully are we talking about in terms of how much lower it is? And then from there, some of the items within the P&L of each that we should be considering that might be levers. So on the retail side, obviously, there's the commissions that we mentioned. And then on the online side, I believe the 2 big ones are the marketing costs and then, of course, the payoffs and maybe just dig into the -- basically the real levers within the kind of product-specific PM, if you will.

Yes. So I'll start, and then I'll let Matt. I think I understand the desire to have the specificity that would certainly make life easier and it would make my life easier as well. Matt highlighted particularly the growth and the nature of the business that we have in the Middle East because the Middle East is a place where it's quite difficult to get licenses, which we are working on, by the way. many of -- much of our business there is partner-driven. And in a partner-driven model, the economics because you got to pay the partner are just fundamentally different than in the economics of our core business or our licensed businesses around the world.

And so the shift in the growth of that particular business is a significantly different business than the more general shift from retail to payout to account. There is a difference in the retail to payout account. And that was part of what I was talking about needing to lower a cost, so that difference is less and renegotiating some of those payout cost relationships.

There are a bunch of other levers, though, that are important. And so in the digital space, payment acceptance costs so how much we pay to be able to do funds in, which is really a strategy of shifting our customers from funding with credit cards and debit cards to funding with bank accounts and digital wallets can significantly lower one of our bigger expense items, which is funding costs, managing card fraud and payment fraud is another significant expense for us, again, in the digital space.

One, shifting to bank funding helps that, but also managing those costs in a more aggressive way also helps it. We continue to look at other efficiency options, particularly in that SG&A line, which you saw go up in the quarter as we continue to invest. And so as Matt highlighted, shutting down it was not an easy decision to decide to shut down the European wallets before we had the next platform in place but the opportunity to save run rate costs of $6 million to $8 million, as Matt highlighted, given the situation that we're facing, we made that decision.

So for us lowering some of those operating costs associated with some of our legacy platforms is an important lever as well.

I repeat a little bit, so I apologize. But just as you think about what's in cost of sales or cost services, the biggest thing is commissions. Commissions represent almost 2/3 of the balance in there. But beyond that, there are, as Devin has highlighted, there are fraud losses, which we're working fast on and feverishly to get to leading loss rates and collection rates. There's payment fees, making sure that you have the best payment fees for your partners we're actually running an RFP right now. There's the call center cost within there, which Devin talked about now for the last 3, 4 years, we've cut the call by more than half. That's actually slowed. That's one of the reasons why is this migration from cash payout to digital over the last couple of years have been happening.

We've been able to manage through that on the cost of sales lines we've been saving on the call center side. That has plateaued a little bit, but we've got some through AI, some things we're working on to improve that further. And the last part is in that bucket is big platform costs. So today, we actually still operate 3 different digital platforms. We still have a handful of settlement platforms that we're working through. And as we go and move down to one platform, which in the last year, I'll talk about settlement side, we were able to eliminate 3 in the last 18 months because we're able to eliminate the last couple that will allow us to continue to reduce the cost of sales side.

Our final question is from Vas Govil at KBW.

I guess just first question, I'm wondering if there's a way to drill down and disaggregate how much of the change in EPS guide is coming from each of the various factors you guys outlined, I know mix shift to digital payout seems to be the biggest one, but also weaker retail like travel money weakness, I don't know if there was some contribution assumed from Intermex for the year. So I don't know if you could help disaggregate that would be super helpful.

So Vas, as you probably have seen, our first half of the year, year-over-year, Q1 was down $0.15. The second quarter was down $0.11. Our guide for the full year is effectively down $0.50. We've talked about the drivers of the first half and what drove those. Q1 had a fair bit of pressure from FX loss delayed money from a partner, or things of that nature as well as a mix item to talk about here today for both Q1 was roughly 50%, 60% for the things we talked about today and it's similar items for this quarter.

I think if you take that, I'll give you a retinal answer for that.

Thank you for joining the Western Union Second Quarter 2026 Results Conference Call. We hope you have a great day.

Okay. Thanks, everybody. Sorry we're a touch late. This is Tien-Tsin Huang. I follow the payments and IT services sector at JPMorgan and excited to have Western Union with us. Devin McGranahan, the CEO, is nice enough to join, come across the country to join us here in Boston. Thank you, Devin, for joining.

It's my pleasure. Thanks for having us.

Always great to see you. I always enjoy...

Yes, you guys do a great job.

No, thank you for that. It's because you're here, and we get to learn, and I know you've been hard at work, and we were just talking about it before. I feel like with Devin and the interactions I've had with him and the team, it definitely feels like the culture has changed and your imprint is definitely there. So well done on that, Devin.

Let's -- I gathered a lot of questions from investors to get through. I'm hoping it's not too detailed.

No, no, no. Let's bang through them. The ones at the end are really good.

Okay. So we can just skip ahead to that. But that's kind of where I was going with this. I needed to get a few just out the way. So let's get the macro question out the way, Devin, and getting questions. I know your user base is very resilient. That's always been the case through cycles. But with higher energy prices and the conflict and everything else going on, are you seeing any impact to your business?

Yes. So there's a lot going on in the world, right? And we're a very global business, which through what has transpired here in the Americas has been valuable to us. So we've been able to benefit from the European and Middle Eastern business during the time here in the Americas where it's been -- since the elections in the fall of '24, the Americas business has been under significant pressure, both here in North America and in South America.

What I would say is we actually are seeing some moderating, which is both the combination of the grow over of the historic declines that we saw, but you can even see it in the bank of Mexico numbers. Some moderating and some promising signs on consumer behavior. So customers are still transacting in the retail environment. Principals are remaining relatively stable at a moderately elevated level. And in some quarters, and we talked about this in the quarter, we've actually started to see a return to small amounts of growth, which means people are coming back. People are still sending money home. There's people have jobs.

And so we remain positive about the long term. And any study you look at anywhere in the world, none of these global economies, none of these major countries can continue to grow without importing talent given where birth rates are even here in the United States were below 2.1. So long term, the trends are with us. In the short term, there's some political headwinds, which seem to be stabilizing. So we will see in the second quarter, but the first quarter showed some stabilization in important corridors like Mexico, like Guatemala, Nicaragua, Colombia, so.

Good. So I know one more related to this is just with the 1%, the cash remittance tax, I know that's giving some airtime. Any surprises on the reaction to that from your users, whether it be on the retail side or the digital front. I ask because investors are saying, hey, it's hard to really know with -- it's just with tax refunds and then again, conflict. Do we know enough data to draw a conclusion on what the impact has been or what it will be?

Yes. So it was tough to say there was any incremental material negative effect given trends in retail improved in the quarter. We do have evidence that -- so we had a big program, I don't know if you remember, in '23 and '24 to get debit acceptance across our entire point of sale. And part of that was is Matt had figured out that the economics of accepting debit was actually favorable to the economics of accepting cash because of cash collection costs and breakage and other things. And so to create efficiency and it speeds up the transaction and support our agents, we've rolled out debit readers and the debit network and trust. That's been a huge boom for us.

And so what we saw in the first quarter is new to franchise retail customers was up double digits for us. 80% of those were debit customers. So people who were using debit cards probably to avoid the tax, we got a disproportionate of it because we had widely available debit acceptance across the network fee-free. So that was, I think, good for us. It helped stabilize some of the retail members.

Yes. So investing in the point of sale and the acceptance of things is paying off for that, which is good to hear. Just one more on the competitive landscape then and behaviorally, what you're seeing. We've been -- Félix has come up some. I think Wise recently with their relisting here in the U.S. is getting a little bit more attention. Remitly was here at the conference just so you know, Devin. Any change in behavior, pricing that's worth calling out that we should be watching?

Right. And we talked about this on the first quarter. And I think we were a contributor to it. And so we've changed our view as the market got increasingly difficult, new customer pricing went to a spot we weren't comfortable with. And you can even see in Remitly's numbers, they saw a significant shift to higher PPT and we can speculate which corridors, but probably India, which helped keep their growth numbers up. But the lower transaction customers, they clearly saw a slowdown in just like everybody else. And so that dynamic in the industry last year contributed to an increasing in our transaction to revenue spread. And I think we're certainly going to take a different attack, and we'll see what the industry does.

Okay. Good. Just since we're on it, Intermex, the acquisition, you're beefing up the retail footprint. And can you just remind everyone here on the thesis of owning Intermex. I mean we can feel up a little bit from some of your answers so far. But why do you still feel great about that?

Yes. So remember, the thesis was threefold. One was we like the network and the operating model. So we've drawn for investors our ideal retail distribution, which is a small amount of owned locations, a moderate amount of independent, and that's a mix of exclusive and nonexclusive so we can be side-by-side with competitors. And then a big base of the strategics, the grocery stores, the post offices, which makes Western Union kind of omnipresent.

And so in Europe, we have that triangle, and it works pretty well. In parts of Asia, we have that triangle. We didn't have that here. We didn't have much of a known location, and we didn't have the second half of the independent -- we had Vigo, but Vigo is relatively small relative to Ria's or Intermex's or MoneyGram's nonexclusive independent agent networks.

The second thing is, in Europe, we perfected this idea of local go-to-market, managing customer experience and pricing at an individual agent. And the U.S. model hadn't been there because we didn't have this much more competitive kind of independent nonexclusive. So first part of the thesis was their operating model was similar to our European model. It's a good management team, but we got owned locations. So in the U.S., we'll now have 250, 300 owned locations, which is -- and we had 6,000 nonexclusive independents. So the triangle, the distribution triangle in the U.S. will look much more like what we want it to look like after this deal.

The second is there was a bunch of products and services, check acceptance, payroll card, certain payout networks like in the Dominican Republic that allowed us to enhance the value proposition.

And then the third, they really are a 6 to 8 corridor company, Guatemala, DR, Mexico. And so we're going to take those agents and add the Western Union network, send money to Philippines, send money to Pakistan, send money to Africa. And so we think in those independent agents, those aren't huge businesses, but we're in that -- we'll now compete with Ria and MoneyGram for those extra corridors in those Intermex locations where they couldn't do it before. So corridor expansion for them, new products for us and a right distribution footprint here in the U.S.

So part of the footprint organically, you've also added exclusive deals with a few agents on top, right? As we're waiting for Intermex to come in here. You're also sort of beefing up that piece as well. Kroger, you talked about -- it's always the name we've discussed, but exclusivity, some others you've talked about, right?

With Kroger, with [indiscernible]. We went -- we won Canada Post, which is a competitive takeaway. And there's 1 or 2 more that we'll be announcing here hopefully before the end of the year.

Right. And that will be needle moving. You've given us some of the.

We went live with Deutsche Post in Europe a couple of weeks ago, and we're already seeing the benefits of that in Europe.

Okay. So it sounds like you answered a little bit, those things are all on time. But the questions I've gotten recently have been why are these good deals on the exclusive side? What's the cost to bring it in? What's your response to that?

So they're good deals because they're exclusive. The unit economics tend to be more favorable than what I referred to as the knife fight in the independent nonexclusive. So the value equation between costs, both commissions and support is different than it is in the independent nonexclusive. But most importantly, they expand the network. So like in Canada, we will grow our non U.S. send to Canada business by having Canada Post because you get payout in all these small towns around Canada with their almost 10,000 locations.

We saw this and one of the lessons I learned was when we lost the Deutsche Post, we never recovered in Germany with the send to Germany business because we lost all these small German towns where there's no other option. And so these large networks add to our ability to have the value proposition around the world with sending to the U.S., sending to Canada and it's convenience for customers at unit economics that we find very attractive.

Okay. Okay. Because with Intermex coming on, you've signed some of these exclusive deals. I'm sure there's value that you're bringing points sale marketing, everything else. We don't need to talk about that. I guess I'm trying to get to before we talk about the...

The other thing, Tien-Tsin, right? So just for people who model these things, right? Deutsche Post is a little different because it used to be ours. It went away and we're coming back. But the rest of them are competitive takeaways. So if customers don't change behavior, and we know this from having lost agents along the way, 60% or 70% of the customers are actually the customer of the retailer. They're not the customer of the money transfer provider, right? So they're not going to go -- they're not going to follow the brand that was there. They're going to keep going to that grocery store or that post office regardless of the brands that are there. And our product is as good, if not better, than the competitors we're taking it away from. So it's not like -- so we win new customers by winning these deals that we didn't have today, right? So that's the biggest economic benefit is it's incremental volume to us by signing that retailer.

Yes. No, I think getting that traffic is valuable, which is kind of where I was going a little bit, right? You're bringing those on. You've got a lot of these new initiatives -- fund initiatives, which we'll talk about next. But with -- and then you're going to absorb Intermex. And so there's a lot going on, on the margin side in the quarter. I don't need you to repeat what happened with the quarter. But from a margin perspective, right, that did surprise to the downside, at least relative to the expectations. Full year was, I think is fine.

So walk us through, right, the visibility you have on the margin front given everything that's going on. I think there's an expectation for that to recover. You're improving or pulling forward some of your efficiency, but you're balancing a lot, Devin. Help give us a little bit of clarity around the visibility that you have on margins. And then we'll do the fun stuff.

So I just want to give me 2 minutes. Let me close out the first topic just on the thesis, right? So as you and I have talked about over time, we made a decision when probably '22, early '23 to reinvest in our retail business, and that was to get market competitive on pricing. There was a significant upgrading and updating to the experience, both for the customers and the agents and then to rebuild the distribution triangle so that we had all the elements.

The idea behind that was not because we somehow think retail is going to be a double-digit grower, but we are a -- I'll make it up, but I'll be close, in most markets, kind of a teens market share player. And so in a market in which the overall market dynamics are flattish to slightly negative. The way you manage that business is if you're the largest players to continue to grow market share. And if we were at 40%, 50% market share, that's a hard proposition. But when you're in the teens being a market share donor in a declining market was not a winning strategy.

And so these wins and our -- is a win market share, Intermex gain scale and market share so that we can propel the retail business with market share gains across the important corridors around the world, right? And so that's what we're doing. Once we get to, call it, 30%, 40% market share, then we should worry about, gee, the market is now not going to recover and what do we do. But we got a lot of market share to go before that happens in most places around the world.

So to your point around the margins, there's a couple of important dynamics going on in our business. So set the first quarter aside, there were a bunch of onetime FX and other things in there. Our business is shifting, and it's shifting on 2 dimensions. It's shifting, and we've talked about this idea kind of a fixed cost coverage. So the normal pacing of our business and what the first quarter means, so we have a bunch of owned stores that do travel money. That's less prevalent, particularly in Europe in the first quarter. So the fixed cost of that. So those businesses are profitable, and we like them, but the profit comes in Q2 and Q3, not in Q1. And obviously, that business felt more of the effects of the war in the Middle East because lots of people, particularly in the U.K., go to Dubai or go places on vacations that they just didn't do, right? And so that's one shift in our business.

The second shift in our business, and you saw it in the quarter, is we are accelerating our digital and our payout to account. So I think we were north of 40% in payout to account growth. It had been in the low 30s. So that was a real step up. On a contribution margin ratio basis, that's attractive business. On a contribution dollar per transaction business, that is lower. And so when you look at our P&L and you see 55% of costs are transaction-based commissions and payout costs and things. But 45% is reasonably fixed, right, marketing people and technology people and product people.

So as we substitute declining higher contribution per transaction retail with faster growing but lower contribution per transaction, you got to manage that fixed cost base. You got to get the fixed cost base in or we just got to get the top line transaction growth. So our transaction growth is kind of hovering around negative 1% right now, positive 1%, right? So we're -- but what's happening is the mix is changing. And so you either got to lower cost or get the whole thing to grow a lot faster. And so we're working on both of those things, right?

And so what we talked about in the quarter was accelerating the $150 million program from 5 years to 3, adopting AI in a probably more aggressive stance than we had taken and moving to a more regionalized operating model. So 5,000, 6,000 of our employee base are in these big operating centers that we have in Costa Rica, Lithuania, Manila. And that model in a very kind of centralized way worked for a long time for us, but we got to move that, got to automate more of that, move it more to align with the regions and take a lot of manual labor out of it. And so that's kind of what's on the agenda for the next 12 to 18 months. And Intermex, by the way, helps us do that because that's going to help us move the North American operating model to this much more leaner and regionalized operating model here in the U.S. and in LatAm.

Okay. Got it. So yes, some of it is seasonal, but the rest of it is you are taking action that's moving and we'll see that, and that will lift that second half margin. Okay. So let's talk about some of the fun stuff that I did want to hit you up on. A lot of this you'll be familiar with given similar questions we've asked to Fiserv, familiar with it very, very well. So this hits into value-added services, Devin, in your beyond strategy, and you want to double your consumer services revenue by 2028. Makes a lot of sense. We like a lot of the things going on there. Maybe I'll just ask you, instead of me listening them, what are the top 2 or 3 that you think will really be responsible for getting you to that double by 2028.

Yes. So there's 2 threads. One, it's taking the products that we've now been perfecting, whether that be bill pay, whether that be prepaid cards, whether that be travel money and enhancing them across the distribution network, both digitally and retail, right?

So we showed a map in our Investor Day of where consumer services products are by region, right? And what you'll see is we have a good bill pay business in the U.S. and in Argentina. We've got a travel money business in the U.K. and in Italy. We've got a prepaid business in Argentina and the U.S. So you look at -- as we built these or done acquisitions, the first opportunity is what I'd call geographic filling, right? We take the products and services, run them across the network, get them all in the digital channels, and that drives growth, right? And we have products that work. We know how to do them now. And so it's the classic Western Union grow by just expanding, right?

The second is building and delivering new products and services. So taking Bill Pay and moving it to cross-border Bill Pay, which is a product that we'll launch here in the, call it, in the next 12 months, right? It's working more on the -- and we talked about this at the Investor Day, too, B2C, C2B products. So being able to do disbursements, being able to enable point of sale in our digital wallets through QR code-based payments.

And then in that new products is really what we're doing with stablecoins, right? So issuing stable cards, driving the payout network for digital wallet providers. And so enhancing the value proposition of our current assets to that digital asset customer base and economy that we have not to date been participating in that much. So really those 2 lanes, expand distribution of existing products, innovate and put new products into the marketplace.

And some M&A, right? We continue to look for attractive products that we can do exactly that, which is by a capability or a platform that we can put into our distribution and play one happens, which is expanded across the Western Union $100 million-plus customer base, the 400,000 retail locations, the 50 digital countries we're in digital array, like that's the play, right? Find something, push it into the system. Which, by the way, was the Fiserv play for many, many years where we would go buy something and then sell it to 5,000 banks.

Yes, and amplify the growth by exposing to distribution. So thinking about that, I think you and I have talked about this, right? The level of trust that a consumer customer has with Western Union is high. They're putting their hard-earned money and handing it to you to give it back to their loved ones or whomever, right? So why not bank them is always a natural question. And everyone seems to be banking their users, embedded finance, embedded banking, [ Fiserv ] talked about that as a pillar for them.

So my question there is, why can't Western Union be a big player in that, Devin? And why not even lend to your products or customers, why not push the card a little bit harder? How easy would that be for you to do? Or do you have to do it country by country? And wallet, I guess, is maybe one way to answer it. I know it's a...

Yes. So that really is what we're doing, right? And we'll be going live with our digital wallet in Australia probably in the third quarter. But we had to get a license, right? We had to get an e-money license. We did an acquisition in Mexico. So again, we could get a license. We'll launch our wallet in Mexico. We got regulatory approval of Lana in February, something like that. So we are doing that. That is the strategy to provide a broader set of products and services, many times digitally.

It's the acquisition of Dash, Singtel. We will have depository capabilities, but many times, that requires us to have a different license structure than we had in place. And so we're doing that even in the Middle East, where we're either doing acquisitions or we're in the application processes to get the licenses to enable us to provide a broader set of products and services. We'll come back to lending in a second.

The second thing is, with our stablecoin strategy, and we'll see where the legislation comes clarity. But that actually offers us the opportunity to provide products and services that have bank-like features without having to have the license. So we're going to launch stable card in a whole bunch of countries, and I don't have to be an issuer processor in those countries, which is what we've been doing with our wallets and our prepaid cards.

On the country-by-country basis, which is why there's not a lot of big multi-country issuers out there, that's hard. It takes time, takes effort. We'll be able to do stable card at a much faster pace, right? And we'll be able to capture people who we're already sending money to say, instead of cash, would you like that in a stable card, which is, in essence, a mini bank account, right? So it's a depository instrument in which you hold value that you can then use to purchase things, right? So it's kind of a bank account, debit card, all wrapped in one, and it happens to be backed by a U.S. dollar-denominated asset, which in some countries has a lot of value given the inflationary or political environment.

So we are headed down that path. Lending is -- it's a thing unto itself. So right now, we've got reasonable business offering other people's lending products. So in Argentina, for example, we now make enough money on origination of loans to cover most of the fixed costs of the rent in our retail locations. But that's with a banking partner. We have a partnership here in the U.S. with Oportun. We have one in Europe with one of the big European banks.

We don't have consumer risk lending capabilities. So in order for us to decide to use the balance sheet, that's both a decision for the Board of Directors on capital allocation and do we want to take consumer credit risk. But more importantly, it will require an acquisition of some kind to get the expertise. I have seen many people who think they know how to lend money, learn the hard way that they don't know how to lend money. And if you lend money in a good credit cycle, you think you're a genius until the credit cycle comes and then you find out, as Warren Buffett said, who's swimming without swim trunks on. So that's a business that we don't have a lot of expertise in. So we're going to be very cautious using the investors' money to go into unsecured subprime credit lending. That's a tough business to do well over time if you don't have some expertise.

So it sounds like just to summarize it, Devin, and I love the wallet opportunity. I think you guys are making the right moves. It sounds like the bottleneck is in getting the licenses. Is it not more of that than the tech piece and the customer acquisition you have the customers to sell into? Is the bottleneck really just the licenses?

So the licenses are probably the biggest bottleneck. I think we -- it took us 2-plus years in Mexico to get an acquisition, get the deal done, get regulatory approval. We've been working on some things in the Middle East for 2-plus years. It took us a year in Australia to get the license. So licensing is a big part of it.

And then with our new Beyond platform, which we'll launch with the wallet in Australia, we think that has the ability to scale much faster than our traditional technology. And so we think we've solved the technology part and now then it really is a go-to-market and licensing situation. And let's pay attention how Australia we -- up is Mexico, Australia, Philippines. Those all have licenses now approved, and we'll be launching the technology between now and the end of the year. So that's the real test to say, how does this all go?

Okay. No, look, it's exciting. So I think there's a lot of activity on wallets. We've done a lot of -- I don't know if you've seen some of our survey work. I mean the push towards wallet seems to be gaining share, right, globally. And it does feel like it's an important vehicle, right, to drive growth and engagement with customers on the financial services front.

On digital asset network, let's talk about that, the next-gen payments network. You gave a fund plan, I'll call it, on the digital asset network side. I think we're in the time frame of when you said we'd learn a little bit more on the partner front and bringing USDPT to market. What's the progress report on that?

Yes. So we went live with USDPT. It is now available for institutions. It will be available for consumers in early June. We've started moving money. First country up was Bolivia. We've signed the agreement with our agent partner there. So we'll start settling in real time on the blockchain with USDPT in Bolivia here before the end of the month.

We'll be going live with Stable Card. The first 4 or 5 countries are all on tap for the third quarter. And so we are largely on, if not ahead of the time line we laid out last August when I announced USDPT, the DAN network and our Stable Card initiative. And so we remain optimistic and see both excitement in the marketplace in terms of use cases, partners, ways in which we can create new revenue streams for us with the use of stablecoin.

How would you describe the discussions that you've had with potential partners users of the network since you've launched, how has that evolved? I'd love to hear, I'm sure you're having some interesting conversations given where you sit with your global acceptance and the compliance and everything else you have, you bring some legitimacy to it. How have those conversations changed? What's the arc?

Yes. So I would put them into 2 groups. One, solving problems that exist. So like I was in the Philippines a month ago or so, and we were talking to one of the large crypto exchanges there in partnership with one of our large payout partners, digital wallet. There's lots of friction in the process today for ensuring adequate funding over weekends, holidays, volume spikes. And this is a way to solve that problem for everybody. It doesn't require more capital on our partners' point, more capital on our part.

And so when you go with people and you start solving real-world problems, people get very excited about it, right? It's not theoretical. It's not a use case that you're dreaming up. It's -- we are going to make this work a lot better, and it's going to take capital out of the system for us and our large partner there in the Philippines. So those conversations progress pretty rapidly, right?

Other conversations, we go and talk to a bunch of digital asset wallet owners who I met with one that's an Asian-based and they have 70 million customers. The promise of allowing their 70 million customers to be able to cash out in Western Union locations, they get very excited about. Whether consumers are going to do that or not or whether all of a sudden, we'll see a lot of volume in our retail network, I can't tell you. All I know is we're going to give them an API. They're going to integrate it, and you'll be able to -- in their 70 million customers, we will be able to check out via Western Union, right? And so that's more the theory of the case, and we'll see.

And then for us, being able to get the capital out of the system, being able to offer stable cards, we know that solves problems for either our agents or our customers. And even if there isn't massive retail consumer adoption, it's a good thing for us. It turns us from a negative float business to either a neutral or maybe even a positive float business depending on where the clarity at comes out. And so we see promise in this just for Western Union. And then if there's market demand or consumer adoption that's even reasonable, that will be upside for us relative to our own internal business case for why we want to do this.

Got it. I'm getting the egg, but 10 seconds or less, where would you rank this part of the discussion, digital asset network versus everything else we've talked about, the wallet push, Intermex. I mean there's so much going on at Western Union, where would this rank? And we're done.

Yes. So for me, this is upside optionality that really changes a bit of the narrative. It changes the nature of the business in a way that doesn't -- I mean, we've proven we can do this. It's not like I got to spend massive amounts on technology. I don't have to create an entirely new business. This lives within the flows and the assets and the customers we have, but it makes it a lot easier to do a lot of different things.

And again, if there -- if all of a sudden, we can offer those stable cards, which, to your point, are little mini bank accounts and customers really like that, that's not in any of the numbers. That's just -- now we earn spread on float. We earn interchange on people spending the money and Matt has a capital advantage on our balance sheet because he's not prefunding all these payout -- cash payouts around the world that we're doing today. So for me, this is exciting because it's a relatively significant change without having to spend years building technology or infrastructure. And what we're now seeing is what's going to be the consumer adoption.

Yes. And it's leveraging what you have. No, I think it's a fun discussion around optionality for Western Union. I'm glad you guys are pushing towards it. Thank you, Devin, for your time.

Thanks, everybody.

Thank you.

Good day, and welcome to the Western Union First Quarter 2026 Results Conference Call. [Operator Instructions] 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 first quarter and full year 2026 outlook, 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 2025 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 morning, and welcome to Western Union's First Quarter 2026 Financial Results Conference Call. Today, I will spend a few minutes discussing our results in the quarter and the emerging stabilization we are seeing in the U.S. remittance market. Next, I will review our M&A strategy and our recent transactions. Then finally, I will give you a quick update on where we are with our digital asset initiatives and the near-term pending launches. .

In the first quarter, we reported revenue of $1 billion. On an adjusted basis, this was a decline of 1% year-over-year. This is a 400 basis point improvement over the fourth quarter and relative stabilization year-over-year. Consumer money transfer transactions were slightly positive in the quarter for the first time since Q1 of 2025, which was a 300 basis point improvement from Q4. Cross-border principal growth was again up mid-single digits, speaking to the resilience of our customer base and their perseverance in the current difficult macro environment.

This quarter, we again saw incremental improvement in our CMT transaction rates quarter-over-quarter. Q1 was better than Q4, Q4 was better than Q3, and Q3 was better than the lows that came in the second quarter of 2025. We believe this should set us up to return to a more meaningful transaction growth beginning in the second quarter of this year. Adjusted earnings per share came in at $0.25 in the quarter compared to $0.41 this quarter a year ago. This is below our expectations and is the result of a combination of some quarter-specific issues as well as a seasonal change for how quarter 1 will perform going forward given the growth of our Travel Money business.

The quarter-specific issues included incremental investments associated with our strategic agent signings, product expansion and the timing of certain expenses that we believe will reverse in future quarters, which Matt will cover in more detail later in the call. In response to the slow start to the year, we have decided to accelerate our operational efficiency program that we first announced at Investor Day last fall. This program is designed to improve vendor efficiency, realize the synergies we expect to achieve from the pending Intermex acquisition, and leverages AI to rationalize our existing business processes and significantly reduce labor content. As a result, we believe we can accomplish our $150 million operating efficiency program by year-end 2028 with large contributions coming in both 2026 and 2027.

Our retail business in the Americas continued to face headwinds in the quarter associated with the current geopolitical environment, though we believe we are now seeing improvement from the steep declines that we saw in the middle of 2025. We did see strong performance in the quarter in many corridors like Italy to Morocco, France to Cameroon and Kuwait to Bangladesh, offset by continued weakness in the Americas across several specific and large corridors, most notably U.S. to Mexico. Though from a transaction growth rate perspective, while still negative, the U.S. to Mexico corridor improved by 350 basis points relative to the fourth quarter.

Our branded digital business increased transaction growth to 21% and adjusted revenue by 6% in the quarter, with gains driven by some of the new relationships we have signed in the Middle East last year. This is an 800 basis point acceleration in our transaction growth rate, and while the revenue growth gap has increased significantly, we are encouraged by the momentum that we are seeing on the transaction side. The revenue growth is being muted by a strong growth in lower RPT corridors continued significant increase in payout to account and some of our new customer promotional offers, which we discussed on the Q4 call. We also believe this will improve in coming quarters.

In Consumer Services, adjusted revenue was up 33% in the quarter, driven by growth in Travel Money led by Eurochange as well as growth in our bill pay business. We expect Consumer Services to have another strong year in 2026, as our Travel Money business is expected to approach $150 million in revenue, up from nearly nothing a few years ago. Matt will discuss our first quarter results and 2026 outlook in more detail. later in the call.

Now switching briefly to the macro and focusing on the Americas as that is where much of our focus has been over the last several quarters. As you know, remittances in the Americas have faced meaningful pressure that began early last year and continued through this winter, particularly across our key U.S. to Latin American quarters. We saw meaningful declines to markets like Mexico, Ecuador and Guatemala driven by a combination of migration dynamics and U.S. immigration policy. What we're seeing now, however, is a business that is beginning to show stabilization and even potentially signs of improvement.

Trends have improved across these corridors with the most recent month March, showing revenue growth rates 800 basis points or better in each of these corridors relative to the lows that we saw last summer. Starting with U.S. to Mexico, which remains the largest remittance corridor globally, Central Bank data shows that 2025 was a down year with monthly remittance principal declining double digits at multiple points throughout last year. As we move through recent months, however, we have seen those declines moderate with inbound principal activity hovering around flat to low single-digit either positive or negative, which is a vast improvement from the relative double-digit lows we experienced last summer.

When we look beyond Mexico, the story also continues to be constructive. Corridors like U.S. to Ecuador and U.S. to Guatemala are meaningfully better today than they were performing last summer and into the fall. However, I do want to be clear. This is not a sharp rebound and not all corridors have improved with U.S. to Colombia, as an example, still showing weakness. But overall, we are seeing improving trends and remain optimistic about the rest of the year.

We believe that what's driving stabilization is a combination of factors. First, migrant behavior has begun to normalize. After a period of disruption tied to immigration policy and labor market uncertainty, we are seeing more consistent sending patterns. Second, remittances remain a resilient category. And many of these economies, remittances represent a significant share of GDP and are nondiscretionary for senders. And third, we are benefiting from the actions that we have been taking, expanding our retail footprint, strengthening our presence in key communities and continuing to scale our digital capabilities.

So stepping back, the message is, North America is not yet back to growth, but it is stabilizing. It is meaningfully better than it was last summer and the improvement we're seeing across some of our most important corridors gives us confidence that the business is now on firmer footing as we move forward.

Shifting gears, I would like to spend a few minutes talking about our M&A strategy. Over the past few years, we have spent significant time advancing our strategic position as the global leader in providing accessible financial services for the aspiring populations of the world. A central pillar of this evolution has been a disciplined but opportunistic acquisition strategy focused on strengthening our footprint in high-value corridors, accelerating our digital capabilities and broadening our financial services offering.

We have deliberately shifted from a strategy of complete capital return to a model that balances capital return to shareholders with value creating and targeted capability-driven acquisitions, where each transaction is designed to either expand our geographic strength, our platform functionality or our product offering to enable us to maximize the value of our global franchise to our shareholders. Last month, we closed on the acquisition of Lana in Mexico. This transaction will help strengthen our position in 1 of the most important remittance markets in the world. The acquisition gives us the license to launch a digital wallet in the country, which we plan to do later this year on our Beyond digital platform, strengthening our wall-to-wallet capabilities.

It will also enable us to build on the success we have seen with our receive strategy in Argentina and Brazil, where we have a meaningful portion of our inbound remittances ending up in our own digital wallets in those countries. This allows us not only to save on commission expense, but potentially opens up new revenue streams for the company. We believe bringing a wallet to Mexico has the potential to change the way we do business in the country by enabling our 2-sided network. We look forward to updating you on our progress as we prepare for our wallet launch later this year.

Earlier this month, we also completed the acquisition of Dash, Singtel's digital wallet business in Singapore, further extending our presence in Southeast Asia. This acquisition enhances our capabilities in key remittance and payment hubs, strengthening our access to digital-first customers in that region and supports our broader ambition to build a more connected Asia Pacific network. Dash brings complementary technology and distribution capabilities that will accelerate our digital onboarding and improve cross-payment efficiency across the regional corridors. We are excited to welcome Dash employees and customers to the Western Union family.

In the current quarter, we expect to close the acquisition of Intermex subject, obviously, to normal regulatory approvals. We are now down to just 1 jurisdiction and are optimistic that we can attain the final approval in the coming weeks. This transaction is expected to strengthen our agent network density, improve corridor economics and further reinforce our leadership in the U.S. As previously disclosed, we expect this combination to deliver meaningful cost synergies, and I am now more optimistic today than I was just a couple of months ago when we spoke on our Q4 earnings call. The opportunity to put these businesses together and truly take a best-of-breed approach, I believe, will substantially drive value for our shareholders beginning in the back half of this year and will continue for many years to come.

Over the last 6 months, the 2 teams have been hard at work designing what the post-acquisition business will look like. The more time we spend together, the more obvious it is that the culture Intermex has built will be a true asset to Western Union. The Intermex team has a laser focus on delivering for their customers and agent partners alike, which very closely aligns with the culture that we have now been building at Western Union. The 2 teams have also been thinking through synergies, and outside of the obvious public company costs, we think there are plenty of opportunities that could prove our $30 million synergy target conservative. We had originally committed to achieving synergies over the first 2 years based on the work to date, I am optimistic that it will be front-loaded as well.

And lastly, as most of you know, we completed the acquisition of Eurochange in the United Kingdom, which has added meaningfully to our scale and our Travel Money platform. This transaction expands our presence in the European Travel Money market and strengthens our ability to serve outbound travelers in the United Kingdom. Eurochange enhances our physical footprint in a strategically important market and complements our broader Travel Money ecosystem by improving distribution density and product diversification. These acquisitions reflect a clear and consistent strategy. We are selectively investing in assets that enhance our corridor leadership, digital capabilities and product offerings, while reinforcing the long-term resilience and growth profile of our global network.

Importantly, these transactions are not stand-alone initiatives, they're enhancing an omnichannel platform where physical and digital channels reinforce 1 another and where the acquisition serves as a catalyst for accelerating the company's strategy. I recently returned from Asia, where I met with our new team from Dash and spent several days with our team launching our new digital wallets in Australia and the Philippines. Our goal is to have an interconnected network of send and receive digital wallets across the important corridors in Asia. I also visited Vietnam for the first time and met with a few of our new partners that will accelerate the development of our payout to account network and home delivery options in that country. We see significant opportunity in increasing our market share to this important and growing market.

As we outlined at our Investor Day, our strategy is focused on growing share in higher-growth markets where, for various historical reasons, we do not have our fair share of the market. Vietnam fits this perfectly where it is a $15 billion inbound remittance market, where we have only mid-single-digit market share. Additionally, some of the largest corridors are from other Asian countries, including Japan, South Korea, Australia and Singapore, where we have a strong presence.

I've also met with our team in Manila as we move forward, growing our operations center there. As part of our Beyond strategy, we are regionalizing our operations in each major region to drive efficiency and speed to market. Manila will be the primary operating center for the APAC region and thus will become part of our global operating model.

Before I turn the call over to Matt, I'd like to make a brief update on our digital asset initiatives. And more importantly, where we are in the transition from launch readiness to real-world adoption and scale. Over the last few months. We've crossed an important threshold. It is no longer a question of if Western Union will be active in digital assets. It is now how fast can we scale. At the foundation of our strategy is USDPT, our U.S. dollar-backed Stablecoin. USDPT is now in its final stages of readiness and is expected to go live next month. This milestone represents the completion of a significant build across issuance, treasury operations, settlement and controls and positions us to operate a native digital dollar embedded within Western Union's global network.

As we approach launch, adoption is beginning to form around the coin. We are working with a growing set of exchange partners to support access, conversion and distribution across key regions, while also engaging with banks and financial institution partners in priority corridors to enable the direct settlement and treasury use cases. Together, these relationships position USDPT as a foundational asset for scaling digital payments and settlement across our platform. Building on that foundation is our Digital Asset Network, or DAN, which operationalizes USDPT and other digital assets.

Across Western Union's physical and digital footprint, we are pleased to report that we plan to launch our first partner on the DAN network next week with additional partners coming online shortly thereafter. Through DAN, millions of wallet users will be able to move from digital assets into local currency using Western Union's retail network with an experience that is simple for customers and familiar for our agents. Since announcing our initial partners, we've seen strong inbound interest, and our focus now shifts to launching and scaling, onboarding new partners, expanding corridor coverage and driving volume as the network grows. Importantly, DAN is not a point solution. Our partner pipeline represents tens of millions of crypto wallets globally, creating a powerful distribution channel that brings digital asset users directly into Western Union's retail and digital network, solving an industry-wide issue of ramping from crypto to cash as a safe and effective utility.

Finally, extending USDPT and DAN directly to consumers, we are preparing to launch our U.S. dollar Stable Card later this year. This product allows customers to hold value in Stablecoin form and spend globally where ever card acceptance exists, bringing digital dollars into everyday commerce. The Stable Card is particularly compelling in inflation-sensitive markets where customers want dollar-denominated value with immediate practical utility. We expect to begin rolling this out across dozens of markets with an initial wave targeted for later this year.

Over time, this card will be consumer-facing expression, connecting USDPT, digital asset, retail customers, global spending into a single, integrated, easy consumer experience. Taking together, USDPT, DAN and Stable Card operate as a connected ecosystem. With launches imminent, partners coming online, and early transactions beginning to flow through the network, we are firmly now in execution mode. The focus ahead is scaling, expanding adoption, increasing velocity and embedding digital assets more deeply into Western Union's core money movement platform. This is an exciting time for the company, and I look forward to updating you on our successes in the coming quarters.

In conclusion, we entered the remainder of the year focused on disciplined execution and long-term value creation. We are continuing to modernize our platform, accelerate our efficiency programs, expand our digital capabilities, and optimize our global network to better meet the evolving needs of our customers. While we remain mindful of the macroeconomic uncertainty and competitive dynamics, our priorities are clear, drive sustainable revenue growth improve operating efficiency and deliver strong cash flow. We believe the actions we are taking position us well for the future, and as always, are committed to maintaining our financial discipline, while returning value to shareholders. I want to thank our nearly 10,000 strong colleagues around the world, who are working diligently every day to accelerate our Beyond strategy.

I will now turn the call over to our CFO, Matt Cagwin, to discuss our financial results in more detail. Over to you, Matt.

Thank you, Devin, and good morning, everyone. I'm going to walk you through our 2026 first quarter financial results and our 2026 full year outlook. In the first quarter, GAAP revenue was $983 million, which on an adjusted basis was down 1%. The decrease was driven by a continued slowing of our Americas retail business, offset by growth in Consumer Services and Branded Digital, which came in at 33% and 6%, respectively. Our expectation is Q1 will be the lowest growth rate of the year due to the benefits of the Intermex acquisition, our new agent wins, accelerated branded digital revenue growth, and the launch of our digital asset strategy that Devin just spoke about.

Adjusted operating margin was 13%. As we singled last quarter, we believe that Q1 2026 would be lower margin quarter due to several factors. Those factors include a lack of vendor incentive payments, which we expect to receive in future quarters this year, and higher costs associated with our new agent signings, a foreign currency loss and the seasonal dynamics associated with our Travel Money business, which has lower fixed cost coverage in the first quarter of the year.

As stated, many of these margin pressures are not expected to repeat in future quarters, and a few are expected to reverse. In addition, we expect to see a meaningful benefit from our cost efficiency program in the back half of this year, driven by the Intermex synergies and lower vendor and labor costs, which will benefit from process optimization as well as the utilization of artificial intelligence.

Adjusted EPS was $0.25 in the current quarter. Adjusted EPS in the current period was affected by the lower operating profits that I just discussed, as well as higher tax rate, partially offset by fewer shares outstanding. Our adjusted effective tax rate in the quarter was 15% compared to 10% in the prior year. The increase in our adjusted tax rate was primarily due to discrete benefits in the prior year period.

Now turning to Consumer Services, which contributed 14% of total revenue in the quarter. First quarter adjusted revenue was up 33%, driven by the expansion of our Travel Money business and growth in our Consumer Bill Pay business. As a reminder, we're lapping the acquisition of Eurochange on April 1, but remain excited about the organic growth, which was up double digit in the first quarter.

Looking ahead, we are actively working to further expand our consumer services capabilities, in line with our Beyond strategy. The Intermex acquisition strengthens our retail reach in the Americas and introduces 6 million new customers to our broader product ecosystem. In addition to that, the launch of USDPT Stablecoin, Stable Card and our Digital Asset Network also opens up multiple new revenue streams, which we believe will help accelerate future growth. As you know, Travel Money has grown from a small business just a few years ago to what we expect to be a $150 million business this year. We are applying the same approach of leveraging our brand, our global footprint and our execution capabilities to the next-generation consumer products and look forward to seeing similar results.

We believe the combination of organic expansion, inorganic activity and digital innovation gives us a durable path to double-digit growth in this segment for years to come.

Now transitioning to our consumer money transfer or CMT business. CMT transactions were slightly positive in the quarter relative to a year ago. This was driven by a robust branded digital business that grew transactions 21%, offset by the continued slowdown in our retail businesses led by the Americas. CMT adjusted revenue was down 6%, which continue to reflect the challenging industry backdrop that we have been navigating over the past several quarters. U.S. immigration policy uncertainty remains a meaningful headwind. Although the comparisons get a lot easier in the second quarter, as we saw the U.S. retail business down double digit in the second quarter of last year. We remain optimistic that the worst is behind us with North America and lack of CMT adjusted revenue growth, improving 300 and 500 basis points versus the fourth quarter of last year.

In the first quarter, our branded digital business grew adjusted revenue by 6%, with 21% increase in transactions. This marks the tenth consecutive quarter of solid revenue growth. The Middle East continues to be 1 of our largest growth regions, driven by our new partner wins that we discussed last year. As we have flied in the past, these are primarily account-to-account transactions with lower RPT than our license business. So the gap between transactions and revenue growth will remain elevated as we continue to ramp these partners.

Account payout transactions continued their strong momentum, growing over 45% in the quarter, which is our strongest quarterly growth that we've seen in the past 4 years. As Devin highlighted, we recently closed on the acquisition in Mexico and Singapore, both our wallet businesses, and we're excited about the opportunity ahead, as they will become more digital in those regions with those acquisitions.

Now turning to our retail business. Overall, the performance of our retail business was up slightly on a transaction basis and more meaningfully better on a revenue basis. We continue to see softness in the Americas, but is improving, as I mentioned earlier, and Q2 gets a lot easier from a comparison perspective. We believe there are numerous compelling opportunities for our retail business to recapture share, and the acquisition of Intermex strengthens our ability to do so. By adding about 10,000 new U.S. agent locations with deep roots in the key Latin America corridors, Intermex expands our retail footprint precisely where we need it most, which strengthens our ability to serve our customers in the United States.

In addition to Intermex, we continue the rollout of our new agent wins that we announced last quarter. We have now launched 3 of the 4 agents with the German post going live last Friday and the Canadian post expected to go live later this quarter. As a reminder, we expect these new agent relationships to add roughly $100 million in revenue once they are fully rolled out, which is expected to occur over the next few quarters. We are excited about the opportunities in front of us. for retail and look forward to executing against the opportunities as we work to strengthen our retail business.

Now turning to our cash flow and balance sheet. We generated $109 million in operating cash flow in the first quarter. This was down 26% versus last year, driven by the lower operating profit that we discussed earlier. As expected, the first quarter CapEx was $47 million, up year-over-year, driven by higher agent signing bonuses. As discussed previously, we remain committed to strategically investing in key areas of our business while also aligning our agent compensation to performance. We continue to maintain a strong balance sheet and cash flow, with cash flow equivalents of $900 million and debt of $2.6 billion. Our leverage ratios were 2.8x and 1.8x on a gross and net basis, which we believe provides us ample flexibility for capital returns or potential M&A, while maintaining our investment-grade credit rating. As a reminder, we will fund the Intermex acquisition with a delayed draw bank facility that we entered into in January. As a result, we expect our debt-to-EBITDA ratios to be elevated above historical levels for the 12 to 18 months post closing.

In the quarter, we returned over $120 million to our owners via dividends and stock repurchases.

Now moving to our 2026 outlook, which assumes no macroeconomic changes and no significant impact from the conflict of the Middle East. Based on everything we know today, we are reaffirming our guidance, which includes our adjusted revenue outlook for 2026 at 6% to 9% revenue growth, inclusive of the Intermex acquisition, which we continue to expect to close in the second quarter this year. And our adjusted EPS for the full year, we believe, will be between $1.75 to $1.85. We expect Q2 EPS to be similar to last year and then to accelerate as we move into the back half of the year, driven by higher revenue associated with improving remittance backdrop, new agent wins, and a seasonally stronger period for Travel Money, combined with accelerating pace of our operating efficiency program, the benefits of some of which affected [indiscernible] our Q1 headwinds that we expect to reverse or not repeat in future quarters.

Beyond the near-term efficiency program, we do see meaningful long-term opportunities from 2 additional initiatives. First, the implementation of AI has the potential to significantly improve efficiency for our business. And second, our Stablecoin infrastructure, which we believe has the potential to reduce settlement costs by replacing the legacy correspondent banking rails with a more efficient on chain alternative.

Thank you for joining the call, and operator will take your questions now.

[Operator Instructions] Our first question comes to us from Will Nance at Goldman Sachs.

I want to just come back to some of the moving pieces in margins, because seems like that was the primary driver of the lower EPS this quarter. And if I'm hearing you right, it sounds like you've got incentive timing in there, you've got some vendor payments. There's all seasonality of 1Q around the Travel business. And so I guess just relative to expectations, I'm just wondering if you can help delineate like what was it that actually drove things that were below expectations versus some of these things, which are more timing in nature.

And I was wondering, on the FX remeasurement, if you could size that, because I imagine that was probably 1 of those items.

Will, thanks for joining the call this morning. Let me just dimensionalize a little bit for you. So we've about 50% of the decline year-over-year is driven by things that we anticipate when we had our call 2 months ago. Those are things like the vendor incentives, which we talked about happening, last year happened in Q1, but we anticipate happening over Q2, 3 and 4 this year, just phasing it when we're actually using it.

Fixed cost coverage, we knew that would be an impact on Q1. We bought Eurochange effective April 1 last year. It comes in with a lot of employees, some buildings, things of that nature, and their revenue and profit are higher -- revenue is higher and profit occurs in Q2 and a little bit in Q3 and 4. So we knew that was going to happen.

And then costs associated with the strategic partners, we anticipated that, that would be ramping spending a fair bit of tech time and signing bonus amortization and other costs associated with that. So that was all anticipated and talked about when on the call last time. The 2 items that were not anticipating when we met 8 weeks ago, was the FX loss. It's multiple pennies of EPS. It's just timing. We've had that over the last 10 years, we've had 2 or 3 times where it's been large, but we have a little bit of gains and loss every quarter, but that was a bigger item, a little bit of a surprise here in March.

And then the other item that we have is our dual track got dislocated. So we have been managing very carefully for the last 4 years the ability to manage 2 things. One is how do we continue to maintain and grow our business while reducing costs on our legacy back book while investing in the future. As you probably remember from our first Investor Day, we talked about a cost redeployment program, and we did a great job of matching up the cost in our dual track. We got a little dislocated this quarter on the pace of investments on our digital asset strategy, investing in some of our other digital assets and replacing platforms relative to how much cost we would pull out elsewhere in the business.

As Devin talked a minute ago, we've doubled down on that in the last couple of weeks, and we see a path to accelerate that, both with the Intermix business, the strength of AI, process improvement, which is why we felt comfortable keeping our guidance where we were.

Got it. Okay. I appreciate all the color. That's helpful. And if I can just maybe throw in another 1 around the conflict in the Middle East. And I was just wondering if you could provide a little bit of color around what you're seeing specifically with money transfers into and out of that region. And how that could evolve over the coming months. I acknowledge that it's very uncertain. Appreciate taking the questions.

Will, we to date have seen a mixed response in the Middle East, and this is typical of kind of our business, right -- and the diversification of our business, right? So we have seen a noted decline, as you would expect, of travel from Europe to the Middle East, which had some impact on our Travel Money business, particularly in the U.K. in the first quarter, which exacerbated the fixed cost coverage issues that Matt talked about. So less people are vacationing in Dubai, and that has an impact on our Travel Money business. However, the opposite is true, which is in the early times of a conflict like this, many people move money out of the region. And so we've actually seen a moderate acceleration of outbound remittances from the Middle East.

Now historically, we have seen similar patterns that then revert themselves if the conflict remains extended for some period of time, where there's less migration into the region, there's less opportunities for people economically, and thus, the overall volume of outbound remittances begins to shrink. So I think we're in the early stages of this conflict. We see mixed results in our business based on the differences of the businesses, and are keeping a close eye on how this develops over time. I think like all, we wish for a quick resolution, so that we can return back to normal course and speed, particularly in our business in the Middle East, which as you can see, is becoming a strong driver of our financial performance, particularly in digital.

I want to come back just briefly on Matt's comment about the dual track in the quarter. We're very excited about the things that we're investing in, whether that be digital assets, whether it be the rollout of the digital wallets in multiple new countries around the world, the signing of new partners. The team has done an exceptionally good job over the last, call it, 24 to 36 months of managing the cost equation while we invest for the future. This is a strength of the team and our ability to get back on track I remain very confident of and the team's ability to accelerate reducing the costs in parallel with investing for the future is where we're going to be for the rest of the year.

Our next question comes to us from Tien-Tsin Huang at JPMorgan.

Just building on that Devin and your confidence there and the dual track pacing issue not repeating itself. I'm just curious, just, for example, the accelerating of the efficiency program. Is there execution risk there. It doesn't sound like the AI savings is a part of that, but I'm just asking that because you're also launching some of these wallets and you've got the digital asset launch. You're also absorbing 2, I guess, 3 acquisitions, including Intermix. So just thinking about the challenge of doing all of those things, but also delivering on the second half EPS acceleration that you reaffirmed there.

Thanks, Tien-Tsin. Of course, there is always execution risk. And part of what I was highlighting in my last commentary is the team has a pretty good track record over the last couple of years as we implemented the prior $150 million program and invested in Beyond digital platform and then building out the Travel Money business. And so this is a known muscle and skill for the team. So I feel confident that we can continue to flex it. We got out a little out of the line with the timing in the quarter. But think about the program basically is 3 things, right? One, there's the operating model efficiency, and in my public comments, I talked about how we're regionalizing that operating model that reduces corporate overhead that reduces some of the centralization. We're well down the path of that. and we'll continue to strengthen our regional operating model in the Americas, in Europe and then in Asia Pacific across our 3 big regional operating centers.

The second is, as we're going on this journey, and we've got line of sight on these things already. We are sunsetting legacy platforms as we move to the Beyond platform as we move to the next-generation point-of-sale as we make the data infrastructure all cloud-based and in Snowflake. That allows us just to shut stuff down which we've got clear line of sight and road map on. And then the third is AI is starting to take effect. We're starting to see broader applications of it across our service operations across our tech development and in some cases, even into our marketing functions. And so we think that will accelerate. And we're building -- the most important thing is building momentum around those skills within people of the company. And so as adopt the skills and the tools that are being developed, we see that in the productivity gains. And then frankly, we just need to hire less people, all of the backfills and all the things that happen every day need to stop happening then as the tools replace the work. So I feel good about it, and I know the team can execute.

Okay. No, that's clear. Just my quick follow-up, then I'd love to hear a little bit more on the 2 acquisitions, Lana and Dash. I know some of it you've been looking at those for quite a bit, but you have a great view on what's going on in the ground in a lot of these regions. Is the vision here that each of these will ultimately be portable into other countries around, say, Mexico and core Singapore. Is that the vision there that you're making bets on these regions with these individual assets and then you're going to expand from there? I'm just thinking about how -- is this the beachhead for each? Or could we expect more similar wallet acquisitions down the road?

Yes, so think about it, and we talked about this at the Investor Day, we've now kind of solidified what we call the Beyond platform. And so the Beyond platform, the most important part of it is a services layer that connects into our infrastructure for core payment processing for core risk and compliance for moving across our funds out network. And into that services layer, we can plug different experiences in different countries around the world so that we can then create a seamless network of these wallets. So that enables us to accelerate this through acquisitions by buying properties that already exist, plugging them into the beyond framework, which then takes advantage of our payout networks. And that's a great example.

In Singapore with Dash, the team is now already hard at work, moving from Singtel Dash's payout network, which was, as you would imagine, significantly subscale to ours and the economics were significantly different, because they dependent on a lot of intermediary players to move the money around the world. We're basically going to turn that off and plug it right into Western Union's APN network, which will have both consumer advantages, but more importantly, format and the team economic advantages on reducing payout costs. And so the Beyond framework and platform that we've talked about enables us to more rapidly expand our digital wallets, both organically, like we're doing in Australia and the Philippines, but also inorganically, like we're now doing in Mexico and Singapore.

The key to this, and Matt can talk more about it, is finding those assets that we can acquire at reasonable valuations and thus then enabling us to expand faster than we can just organically. When those opportunities present themselves, we will take advantage of them.

And Tien-Tsin, if I could build a little bit on what Devin just said, when we looked at these wallets, for us, I wish there was a global license and you could just basically buy 1 license and do the stuff everywhere in the world. So we don't have licenses everywhere in the world would like to be today for our wallet strategy. by buying in Mexico and in Singapore that brought licenses. So that's kind of step number 1 we didn't have the license to do this. Two, as we always look at the tech stack as it brings them into us, is Devin just talked about, we feel pretty good about where we are now with our beyond platform. Back when we started talking to Dash, we were not in the same place. We were still doing a little bit of creativity in Europe in a couple of places in Latin America, and we made some evolutions in learnings and gotten stronger over the last 4 years. .

So we were looking at them for the technology at that time to bring in ideas and thoughts about how to make ours better, faster and pace. We've now caught where that is. I don't think that's as paramount as it would have been before. But Devin could expand on this maybe in the after call. But he was just in Singapore with the team.

The other thing we always look for is people. And when you can buy a company that brings in really strong talent, it's local knowledge base that they can help you accelerate, and we're super excited about Dash for doing that because we brought good concentration of operations folks, tech folks, market present folks and then now we can overlay the fact that we got great payment rails around the world. We've got brand recognition around the world that we can then take that in ports and fuel and then start creating a wallet payout between Singapore, our wallet in Australia, which we are taking live right now, our wallet in a couple of other places which we've not talked about. So we're building on an infrastructure within Asia where you can start doing well-to-well transactions, which has helped us do. So I'm very excited about both of them. It might have been 1 of the longest regulatory review process in my life, but we're excited to have them part of the family.

Yes, a couple of years, but through that. That's great. .

Our next question is from Vasu Govil at KBW.

I guess I'll ask my first one on the Stablecoin launch. Could you maybe talk through the go-to-market strategy there? Are you targeting users in specific corridors when you first launch it? And sort of what milestones should we be tracking over the next 12 months?

Thank you. Think about it in 3 different tranches. The first, which is the launch of USDPT, we are not originally launching that as consumer facing. So we are launching it as an alternative to the interbank Swift settlement network that we use today that Matt and the treasury team use to settle with our agents, and so we are launching in a couple of countries with some important aging partners here in the next quarter to begin moving and settling between us and our agents on chain in real time at much faster speeds and again, over weekends and holidays where we have capital tied up because the traditional banking system only settles Monday through Friday and takes T+2, T+3 in some parts of the world. And so that is launch number one, and that is going to be within Western Union, modernizing our settlement platform and our money movement in between us and our major partners around the world.

Launch #2, which will happen next week, is the digital asset network. So we're enabling digital wallet companies, digital asset wallet companies around the world to be able to have Western Union as a funds off ramp or payout option for their wallet customers. So it opens us up to a population of millions and millions, $10 million plus, native digital customers who own digital assets in wallets around the world, and they can now pay out those digital assets and fee out currency across the Western Union retail network. We have a pipeline of partners that have signed and more in the pipeline to time, and then we work through each and implementing them so that they have that option for their customers. As I said, the first 1 of those will go live next week.

The third, which is more consumer facing is our Stable Card. And that product, we're launching in a couple of countries here and I'll call it the next 90 to 180 days that will allow us to then offer as a payout option to Western Union customers a Stablecoin backed card as an alternative to pay out to account or cash payout. So you will, as a consumer in 1 of these countries, be able to select a Western Union Visa Stable Card to receive your remittance payout. And so you can look forward to seeing the milestones of consumers having that as an option in a number of countries before the end of the year.

That's super helpful. And just a quick follow-up, Matt, on the margins. If you could just help us with how we should think through the cadence of margins for the rest of the year so we can calibrate our models accordingly. That would be super helpful.

Yes. So think about -- we now provided in our outlook, tax range, interest is pretty fixed. So I think you can back into the margins off the comment I intentionally gave on -- think about Q2 EPS being in the ballpark of last year, and then accelerating from there. I think you can back into margin off that because we pretty much help you below the line. .

Our next question comes to us from Bryan Keane at Citi.

I just wanted to ask about the digital -- adjusted digital revenue. It kind of stayed at 6% despite the surge in transaction growth to the Middle East. So if you just separate out the Middle East surge kind of what happened to the relationship on adjusted revenue to digital transactions.

Okay. So as we talked about, Bryan, back on the Q4 call, we had seen some market trends towards more aggressive new customer offers, particularly coming out of the lows of last summer. We probably followed those to the detriment of revenue to maintain new customer acquisition. And so what you are seeing is the impacts of that program along with the shift to path to account and the shift on these lower RPT corridors. So it's both mix, which are growing strongly. As Matt said, payout to account grew 45% in the quarter, which is a material acceleration for us yet again. So payout to account is growing faster, which is an impact. Payout to low RPT corridors like India is impacting. We're doing better in those kinds of quarters than we historically have. .

And this new customer acquisition strategy that we are moving back from a bit, which was very aggressive new customer offers, that impacted revenue is in that mix as well.

Okay. That's really helpful. And then, Devin, obviously, AI continues to evolve, and productivity gains are continuing to show some [indiscernible] results. I guess, can you quantify what you think AI could do to some of the back office costs for Western Union?

So we believe it can have significant impact. A lot of our processes, a lot of our historical support infrastructure will benefit from modernization. The most important thing is the pace at which we've been able to do that, and we've now been on this for 3 years. We've moved a lot of the data to the cloud. We started sunsetting systems. We started automating. It has always been throttled by how much tech development you can do, how much you can ramp down legacy systems, ramp up new systems. And so for a company like us, the ability to accelerate the move from the old, many times, heavily labor-intensive systems and platforms that support operations, customer service, risk and compliance, treasury functions, accounting functions, is, in fact, the elixir that allows a large legacy company to start moving a lot quicker on this modernization journey.

And so that's really what the team is focused on, which is how do we accelerate the path we already know we needed to go down of getting off of these legacy processing and support and infrastructure platforms at a much faster pace, which then takes away a lot of the labor that's required to support, maintain and operate them. And so we're making good progress on that. And that is part of why I think we believe we can accelerate our most recently announced operational and efficiency improvement by at least a couple of years because we're starting to see the green shoots on it.

Our final question is from Darrin Peller at Wolfe Research.

I just want to go back to the comments you made about expanding the retail footprint for a minute. I know you've had in the past, touched on kind of paring down locations and being more efficient. Maybe help us understand the strategy here again, just to revisit where we're going to go geographically that you think there's real opportunity. You touched on under your prepared remarks, but I guess I'm curious if that's going to dovetail with your push on more wallets more digital, more international on the digital side as well just because it feels like it's a lot to do in 1 period where you're going more digital, more white label partner it stable going kind of revisiting some of the tenants based on the execution.

Yes. Thanks, Bryan (sic) [ Darrin ]. I think you can think about the footprint as a twofold strategy, both of which are reasonably well controlled, one, which we've talked about ad nauseam in the last 2 or 3 calls is we have ramped up and have succeeded in signing several significant retail partners Kroger going exclusive, the Deutsche Post, the Canada Post, these will expand our retail footprint. But most importantly, their competitive takeaway, and so they allow us to expand our customer base in retail through the addition of partners that on any given 1 of them will have several thousand locations up to as many as 10,000 locations. So that strategy of signing material partners and being the company that is the partner of choice for large retail networks is well underway. And as Matt talked about, we see significant revenue gains in the coming months from the implementation of those partners.

The second, which we've talked about, which is more controlled distribution, which supports the digital strategy. So those are our owned locations and our concept stores, where, again, it's a small part of the distribution. Today, it's a couple of thousand. But that really allows us to control the experience. We can introduce people to the digital products, the digital wallets, we can cross-sell, Travel Money, Bill Pay, Prepaid. And so our owned retail network in New York City has the strongest performance on our Prepaid as the remittance tax came in, because it's our own employees who are helping the customer understand the value of the Prepaid product with the remittance tax. So those 2 dimensions are really the strategy.

Okay. All right. One follow-up. Just timing-wise, I mean, again, some of these initiatives are exciting around both the digital wallet partnerships you went through earlier and the digital wall in terms of -- and the Stablecoin dynamics and strategy there, both on the Card side and the Network side. Just what are the timing expectations you'd expect to see some of the fruit of this? I know it's been an investment initiative for a number of years. .

Getting and expecting real benefits before the end of this year, and Matt can talk more about it. But Stablecoin products and services are all being launched as we speak. The wallets are ramping. We'll start to see the benefit of Singtel probably here in the second quarter. And as we launch in Mexico, Australia, Philippines, as those come online, we believe the value will start to accumulate, which should all happen before the end of the year.

If I can just build on Devin's point real quick, kind of call wrapping up here. But if I work my way through the 3 topics on a Stablecoin, some are very much easier than others, just the infrastructure they're using, which I know at times we talk about how hard is to roll things out in our organization. But the Stable Card, the partner we're using and the rails we're using, we'll be able to get into dozens of locations relatively rapidly versus doing onesies and twosies. The DAN network, we're able to use our current rails in our normal payout network. So that will be able to be rolled out pretty broadly pretty quickly.

The 1 that's a little bit more of a grind is getting the right partners and the pay and pay out for using USDPT to build to use for settlement processes. We're working on a few countries right now, hoping to that progress is the world will evolve and help us accelerate that. But that 1 is a little bit more of a -- we got to go push our way through it and get it to work. We're the first to have ability to get more broad-based than we normally do for a lot of our stuff.

Thank you for joining the Western Union First Quarter 2026 Results Conference Call. We hope you have a great day.

Thank you again for joining us. Again, I'm Darrin Peller, covering payments and IT services at Wolfe Research. We're really happy to have you guys with us. And we're really happy to have Western Union with us

I'd love to just start off with hearing about the most recent year, I mean, it's been an exciting time for the company, and we have Matt the CFO with us to walk us through it. Look, you guys, the anticipated Intermex acquisition and numerous growth drivers emerging in the Consumer Services business. Just what are you most excited about in terms of the accomplishments ahead of you and the goals for '26.

Darrin, thank you very much for having me here today. I'm going to take a step back and answer that question. But -- you had a chance -- maybe better. You had a chance to sit at our Investor Day back in November. And as we sat there, we talked about our digital-first strategy built on a very strong retail platform, which I'll get to your question here in a second, led by strong growth in digital and then expanding and doubling our consumer service business. So to your question of what's exciting for me. We announced last year, middle of the year, an acquisition of Intermex. It's a $500 million to $600 million retail business that we were able to do.

It was not on our radar screen. It was an acquisition where the market pressures have lowered their multiples, have them provided us an opportunity to buy them for roughly 4 to 5x EBITDA. And we've now spent the last seven months with the team getting to know them, get to know the way they go to market, get to know their processes. And it's a tremendous asset that we're able to bring into the company in middle of this year.

So I'm super excited about that. I'm also excited about the continuing work we're doing on consumer services, continuing to grow out our travel money business and then continuing to build our stablecoin strategy, digital assets.

Cool. Look, let's take a step back and go through some of the trends you're seeing in the market. There's a lot of noise and a lot of tailwinds and headwinds, but somewhat more headwinds, I'd say, than tailwinds these days around remittance. And so start off with what you're seeing in the market, if you don't mind, first, in terms of just trends lately. And we'll go into specifics around how you're being impacted by some of the geopolitical noise and some of the migration topics, but just high level for a moment.

Yes. So certainly. So we've seen a meaningful headwind in the Americas over the last going on five quarters, started in North America Q2 last year, really coming around, to your point there a second ago, the immigration policy, whether it be the ICE rate, whether it be the lower immigration, we've seen immigration to the U.S. has really dropped by about 2/3 from pre-Trump to where we are now.

That is actually -- that part not having a massive impact on our business today. It's more the concern about being out in the market and our customers going out and doing transactions in retail locations has been more pressure because of fear getting picked up. But over time, we're going to see an impact on the U.S. economy for not having enough blue-collar workers to do the jobs we need to get done and then ultimately, potentially an impact on our business.

Where are we on that front in terms of the impact on -- from migration trends in the U.S. lately? Are you at a steady rate now in terms of what you'd see it in terms of impact to retail transaction growth rates? Or -- and just remind us some of the numbers, if you don't mind, in terms of some of your transaction growth rates in retail in particular?

Yes, certainly. So we've been now down in the Americas, low double digit now going on three quarters to Q2 through Q4. So it's been relatively stable, bounced around between, call it, 11% and 14%. So we do see that where we get retail. Retail. So if we get into Q2 this year, we'll start to lap that.

Right. And guys, to put it in perspective, that's retail, digital is still growing.

Yes. Digital, worldwide last year grew about 6%, transaction is 13%.

Right. And so if we put it all together, your transaction growth has been pretty moderate. I mean...

Last year was down a little bit. The previous two years were positive. So the retail pressure caused it to flip negative. But again, we think we'll lap that this year.

And that's what I was going to say. So we're going to lap that this year. But again, it seems like the impact of migration trends or patterns in the U.S. due to a lot of geopolitical stuff is actually in the run right now anniversarying and you're not seeing it worsen.

Correct. Agree.

Okay. How about the potential impacts of remittance tax and the digital shift? I mean I know that's something maybe you want to explain that for everyone and what's going on there and how that impacts the business?

Yes, certainly. So I'll give the headline, and I'll back it up a couple of steps. The headline is not material to us what we've seen in the first couple of months of the year. But what is the remittance tax? So the government put in place a 1% tax on any cash payout transaction. So if you go and initiate a transaction with cash, that will be taxed at 1% here on a U.S. outbound transaction. That -- I'll back up a couple of steps here. That started out as a 5% tax when they proposed it Q2 of last year. We spent a lot of time with lobbying efforts to get that reduced from 5% to 1%, also got to eliminate at one point that they were going to require our agents to go and decide to someone a citizen.

So the original rule was very challenging. Ultimately, what came out has an impact on our customers. But for us, we've not seen an impact on transactions changing the trends we saw before. And how we got there is you know we've been working on a debit card strategy for going on 2 years.

We had modest penetration before the tax. But we -- as a company, we were about 5% in Q4. Now we're in about mid-teens. But even readers in our agent locations was moderate before the tax came out. We used the second half of last year to go mobilize and get as many point-of-sale solutions out in the marketplace, and now we're about 90% penetration in all of our agent locations.

So the combination of you getting out there and the need for the consumers to want to use it is really driving debit to really be...

And that allows them to save the tax. We've also seen from the tax, we've seen an uplift in -- as you know, we launched about two years ago, a prepaid solution. And we've seen that prepaid uptake go up by about 4x versus what we saw in Q4 and what we've seen so far this year in Q1. It's still early days. We're looking at what the reload rates will be and what the lifetime value of these customers will be, but we're seeing more penetration with that.

How about the conflict in the Middle East, Matt? I mean, obviously, there's key corridors between whether it's Saudi or UAE sending money back to India, Pakistan and other markets. We've seen in the past political turmoil has caused an increase in transactions. Are you seeing that?

It's early days. It's been a couple of weeks now. We are seeing a modest uptick in the outbound. Typically, when there is a conflict, we will see people wanting to get their money out of the conflict zone. This is something we're watching very carefully, though, because where the bombs are going is touching other parts of our business. What that will do, we're not seeing an impact today. But if it were to continue beyond weeks and months, what happens with tourism into Europe into Turkey?

What happens to our travel money business, consumer services. So we're monitoring this very carefully. Hopeful that we'll get to a point where the conflict gets resolved. The most important part, the good news is we do have a big team in the Middle East, and thankfully, they're all safe, and we've been helping them get out and take care of their families.

Okay. That's good to hear. When we think about the new partners you're adding, [ PartnerOS ]. I mean, you're having some really good traction. I mean you added Kroger and Deutsche Post, Canada Post. What is the offering that's allowing you to really win those types of businesses?

Yes. So it's more than just the point-of-sale solution. I got to take a step back on this. So for us, we really walked away before Devin got to the company about 4 or 5 years ago, we had walked away from retail. So we had not added -- you probably -- you've been covering us for a long time. We had not added strategic account probably in a decade. What we've done over the last 4 years is we've modernized our point-of-sale solution.

Retail iOS actually allows you to embed many different solutions into it so that you can have a one-stop shop making the agent's job as easy as possible. We started visiting our competitors' agents well before they put out an RFP because typically, when an RFP comes out, if you don't already have a relationship, you're probably not going to win.

You might actually make the other party pay more, but you're probably not going to win. So we've been spending the last 2 years building relationships. Canadian Post one has been an 18-year journey. Deutsche Post, we didn't -- they were -- as you know, they were a partner of ours that we lost 4 years ago, 3 years ago.

And we never stopped talking to them, and they saw the improvements we've made and the ability for them to go be more effective and they want to get back in. So this is a continued journey we're working on both from the product sales side, from the technology side and helping them understand how we're going to help their customers have a better, better interaction experience, and that's given us a really strong pipeline.

Can we touch on digital? What's the latest trends there? I mean -- and maybe help us understand what you're doing to enhance or just continue driving success in that area as well as potentially the gap between revenue and transaction growth.

Certainly.

Just remind everyone that you have metrics.

So we've now been going on three years of double-digit transaction growth, two years of mid- to high single-digit revenue growth. As you just highlighted there, there's a gap of, call it, 500 to 700 basis points. The driver of that initially was we launched a new go-to-market program where we're doing first-time customer-free transactions. And then we got to a point of stability this year, the '25, the reason for the spread is we've won two large partners in Saudi Arabia, which we talked about in Q2 last year that are more account-to-account payouts.

So this is someone who would do a transaction initiated on the account side and then paying out to someone else's account. Those come at much lower take rates. And as a result, that growth rate is driving a wider spread between transactions and revenue. We'll start to anniversary that as the year progresses.

But are you seeing stable or good trends on digital lately?

We are continuing to see solid trends. As we talked about in February, the strength is really coming out of the Middle East. The war is helping that a little bit, and we're still in seeing flattish stability around the world where we're working on improving new customer growth.

All right. Great. Great. Just from a competitive standpoint, I mean, you've gone through different pricing strategies over the years. I've seen very dramatic moves over the last 10 years covering the stock or more than that. But more recently, I mean, you've really tried to establish competitive pricing and dynamic pricing, right? What's the latest where dynamic pricing is enabled in the U.S. and abroad? I think you stated somewhere around over 50% enabled in the EU, I think, if I remember correctly. But just what's the update?

Yes. So let me talk about pricing. There's two parts of pricing. One is we talked about at our Investor Day that we now believe that we're competitively priced in about 70% of all the corridors around the world. That then to be able to do dynamic pricing, and let me describe what dynamic pricing is, dynamic pricing is where we actually go and get our competitor data during the day, and we will update up to three times a day the FX rate to be as competitive as possible. You can't do that if you're not a market. So getting that 70% is the first parlay to be able to go and then actually go do dynamic pricing. To your point a second ago, right now, we're about 75%, 80% of all transactions out of Europe on the strategic pricing and dynamic pricing. U.S. is closer to 40% to 50%.

Okay. All right. Maybe just shifting to principal per transaction. I think it was up 5%, right? And so -- and I think if I remember correctly, you guys thought at least short term, this is the new norm. That's pretty decent trends from a same-store sales, if you think about it that way. What's driving that?

Principal on your question earlier on immigration. So we're seeing people going, doing less transactions but larger principal amounts. That's actually not a good thing for us in the long run. Right. You want to see more. You want to see more transactions. So for those who don't know our business, we charge a fee to do a transaction, and then we'll charge a spread on top of the FX rate. So more transactions, you'll make more money. So it's not necessarily a good thing, but it does show there's still stability and people are still sending money back home. They need to support their families. It continues to support our understanding.

So effectively, migrants are just trying to mitigate how many times they have to make a transaction and get out there, but they're doing more when they do.

Correct.

Where they're sending with other people and grouping transactions together.

Correct.

How about Intermex? I mean it's in your guidance for '26. What's the latest on what needs to be approved for the transaction timing?

Yes. So we are down to four states in one country, all of which we have line of sight on that they'll hopefully get completed here in Q2, which is what gave us confidence to include in our guide for the year. We also included our guide for the year because we are going to integrate the teams very quickly and the businesses very quickly. And the ability to do a, "Hey, Intermex is this, core business is that." Will be very hard to do after a couple of quarters. So we felt it's more important to give full year including it.

Okay. When we think about the business itself, you've compared it to the -- the way European business or retail operates. Just help us understand that. What is it you're really benchmarking off of? What's the similarity there that you're looking at?

Let me talk about how our retail business works as a whole. So imagine a pyramid. The bottom of our pyramid is our strategic partners, which we've now won a couple of new ones we talked about a few months ago, which we believe will generate $100 million of more revenue as they fully ramp as we get to the middle of next year. Then you have what we call our independent channel. This is where it's us and one of our competitors sitting in an independent agent location, you can walk in, you can price shop.

So it's very price sensitive. Intermex is very strong with that. They have about 10,000 agent locations. We got about 10,000. So now we're doubling that here in the U.S. Europe is much heavier independent. So it's more similar to that. And we've been working on the strategic side with taking the U.K. Post exclusive last year, went into Deutsche Post, and we're working on the bottom of the pyramid.

And then the very top of the pyramid is company-owned stores or what we call concept stores, which are exclusive locations that look and feel like a Western Union. So what Intermex is helping us do is they're helping us at the top, because they have about 150 stores here in the U.S., which we have very few. And then they're helping us double the middle, which we didn't have enough penetration in the independent channel.

Okay. When we're staying on the topic of Intermex, I think they have about 6% of their transactions that are digital. I mean how does that compare to Western Union overall right now?

About 40%.

Right. So you're obviously way underpenetrated in terms of Intermex. Is that -- what kind of an opportunity is that for you guys? And is that going to help you drive digital growth even more over the next several years?

So it's one of the reasons why we bought them. It's not part of our thesis for the purchase price, but it was one of the things we talked about on our announcement call is they've got 6 million customers. We think that they have a very antiquated digital platform, and they've gotten to that 6%. We're going to go bring them into our tech stack, continue to brand it as Intermex. And we believe that through our better technology, their brand recognition and their 6 million customers that we can drive an accelerated growth in digital.

Okay. That's good to hear. Putting it all together, the synergies and the guidance, does it embed any cost or revenue synergies in '26? Or is this more of a '27 story? I realize the bulk of the $0.10 accretion you spoke about in the first full year post close.

It's still original -- when first announced, we're talking about $0.10 you just said. There is negligible benefit this year from a cost synergy standpoint. While we're maybe closing 4 to 6 weeks earlier than we originally anticipated, a lot of the benefits are going to come through payout commission savings, send commission savings, headcount and support functions and to get the headcount, you got to go work on the technology, which is going to take us from the time you close 9 to 12 months go, get the technology embedded. From the payout partner side, you got to go negotiate and you got to have the contract up. So we think it's going to take most of the rest of this year to work our way through that and start getting the benefit as we get into 2027.

All right. That's helpful. We all think about Western Union, we think about money transfer. But consumer services has become a pretty big growth driver for you guys lately. It's actually very strong, in particular, in the last, let's call it, 18 months. And so maybe you could just reframe what are the subpieces of -- what is the company doing in consumer services, maybe relative size of each of those pieces and their growth rates?

Certainly. So I think the simplest thing I think about consumer services, we have 100 million customers. We have about 40 million customers on the send side, about 60 million customers on the receive side. Our goal is how do we serve them with additional products. So consumer services just expand that TAM for our customers.

And when you get inside that, we now have principally three large products. Our largest one is our bill pay business. It's about $100 million, $150 million business. It's growing in the mid-single-digit range, largely based here in the U.S. and Argentina, but we've now got in a couple of different markets around the world, we're trying to expand it.

So it's a combination of growth from same-store sales is growing, but then we're also getting expansion opportunities. Our second bucket is retail money order. This is a very low growth, no growth business, but we can take share. And it's principally a U.S. business that we believe with expanding our agent locations with the Intermex acquisition, we have the opportunity to get further penetration in this market.

But as an industry, it's not a growth market. It's more of a take share market. And then the next largest one for us is travel money. This is a business where we had a few tens of millions of dollars that go back two years. We'll probably exit this year about $150 million. Last year was about $100 million. It is principally located in Europe right now. We've got a little bit in Asia, a little bit in Latin America, but the heaviest concentration is in Europe. As you mentioned before, we did the EuroChange acquisition last year, which added a little over 1% revenue growth to last year's results. That business, it depends on what part of the world you're in, but overall, it's growing low single digit.

If you're in the APAC markets, it's mid-single digit to high single digit. So it really depends on what part of the world you're in. And what excites me about all of it is the white space. We're only in a couple of handfuls of countries for all of our products. So we have the ability to expand, whereas on the consumer -- on the remittance side, we're already in every country. We're in 200 countries around the world. We have digital in 50 countries around the world. Our opportunity there is really taking share. Here, our opportunity to take share and go fill in some white spaces.

Okay. What about wallet and card services? I mean that's an area that I know is, in my view, one of -- probably one of the biggest opportunities for a company with such a huge network of end users on the other side. So help us understand what that is.

Yes. So other things in consumer services, we've got our wallets, we are prepaid. We got our new digital assets. On the wallet front, we're now in about 9, 10 countries around the world. The purpose of it is your customers on an inbound market can divert the funds and I can save commission expense.

On the outgoing market, a lot of our customers can't get banked. They can't walk into the traditional BofA or whatever bank you're banking with. They don't have all the credentials. They don't have the credit history. So using a wallet solution allows them to get into the digital market. So we're seeing strong uptake. I think Devin talked about in the last earnings call. In the U.S., we launched a soft launch of our Vigo Money wallet, are seeing tens of thousands of customers enrolled with no marketing or near no marketing, while we've been working on getting the platform right and testing the customers and functionality.

So it's -- we're excited about what it can do for us, but I'm really excited on the receive side. And on the receive side, we just got approval in the last week or so for our acquisition in Mexico. You probably remember announcing that two years ago. It's probably one of the longest regulatory reviews in my life. I would not have put that in my guidance as long as that took. But that license is going to hear close in a couple of weeks from now, and then we got to get approval for our new tech stack, but we look to be in market there coming later this year or early next year.

Yes. I mean, I don't know if you've ever quantified how many users you have on received markets, but we've heard about 9 million.

60 million received customers.

Yes. I mean, that compares to 9 million digital users roughly in the U.S., right? And so there's a multiple -- 5, 6x multiple of the number -- if you can get them banked effectively with a digital wallet, it could be a really big opportunity that's really not at all in any of your numbers.

Largely not. I mean it pays for itself by saving the commission expense and then it grows revenue if you can go monetize other consumer services to them.

Yes. How about stablecoin? I mean, more broadly, it's been a topic, obviously, of concern for investors on cross-border companies in particular. But for you guys, I mean, are you seeing any evidence of it shaping up as a risk or for -- either for you or the industry?

We see it more as an opportunity. We don't see it as a risk for the industry. Let me describe the risk part, and I'll come to the opportunity part. The risk part, our customers are sending [ $350 ] each. To go and set up a wallet, send money to someone else who has set up a wallet and then you have to figure out a way to get the cryptocurrency or stablecoin on your send side. They got to then go convert to fee on their side. Those things are hard to do for $350, sending the average customer sends 6 or 10 times a year.

So we're not seeing that in our customer base. If I were sending $100,000, I'd probably go consider that a lot. But what we're doing about it and why I think we're actually turning this into an advantage for us is we've launched a digital asset strategy. Our digital asset strategy has really three elements to it. First off, we're trying to work on our treasury management. We send about $120 billion around the world every day or every year. It's $500 million a day. We have created over 20 years ago, we created a real-time network already by doing prefunding, by getting partnerships with agents where you pay them a commission rate to give real-time funding.

We think we can go and pull a lot of the capital out of the marketplace through using a digital asset. We've already started -- we've [ minted ] our first coin. We've already tested with a partner. Just yesterday morning, I'm on the call with one of our large partners in one of our top 5 markets in the world about how to use them to go do this to move to a digital asset, and they were very intrigued by it.

So we're working through that, and we think that will help us from a working capital standpoint. The second area is we're launching stable cards. We will be a market with over a dozen markets middle of the year. This is -- think about this as largely our customers who are in high inflationary markets. You're in Venezuela, you're in Argentina, your family is sitting here in the U.S. or somewhere else in the world and they're sending you home money, you can then divert the money to a stable card.

That stable card allows it to stay in USD and now you're protected against the inflation in that market. And then for us, we get to, a, save the commission expense because you didn't have to go through an agent to pay it out. And then you can pull the money out through my third thing I'll talk about in a second, the DAN network or you just go swipe like any other credit card and we'll make some interchange off of it. So we get to monetize it a second time. And then the third element of our digital asset strategy is what we call the DAN network, Digital Asset Network. We're using our agent network to help people who want to load funds into a Digital Asset Wallet, either on the send side or the receive side, we'll be in market middle of this year with four partners, and we've got a long pipeline of others we're working on. And the goal here is how do you help people get on and off of the digital asset ramps.

Very helpful. I guess when we think about AI and data, and I'm going to ask just maybe one or two more and then turn it to the audience guys. But when we think about how much data you have, you probably have among the most in the industry, specifically remittance industry given your scale and size. How do you see this as a competitive advantage? Or does AI actually enhance this opportunity, some of these opportunities for you?

I think AI is huge in a couple of places. For us, we're already using our customer service centers to actually assess our call agents and quality of the service they provide. We're already using it within our technology group to do programming. We're starting to use it in our fraud detection department to minimize fraud. And to your point, the level of data we have, we can look across the 100 million customers. We can look at the frequency of -- typically, you don't have a regular sender or a regular receiver where fraud is happening. It's usually someone who's new, so you can go and look at that. So I think it's a game changer over time. The questions come up in every meeting we've had so far here today. They all want to know are we the next block and we're going to go lay off 40% of our people. I don't think that's going to come from us in the next week, but I do think as an industry, at least for Western Union, I think you'll continue to see how technology can help you, in particular, AI can help you to continue to streamline your work.

Right. And then just lastly, what are capital allocation priorities for the year between dividends, buybacks, M&A? And I mean, do you have capacity for incremental M&A when you digest Intermex or you digest Intermex?

So nothing's changed. Our strategy since I've been here has been we're very committed to our dividend. We have bought back about 1/3 of our stock during my four years, which has brought down the check for our dividend by about 1/3. So we're down about $300 million of our free cash flow on the dividends. We're very interested in M&A. It was not a focus of our company prior to the last three years. We've done a handful plus small tuck-in deals, one large one in Intermex. Where we can find something that provides new financial service that we can provide to our 100 million-plus customers. We're going to go look at those things that make the right sense for the product, service, customer price, all that. And -- but whenever there is nothing there, we're going to continue to return it to buyback as we've done the last couple of years.

So Matt, we're sitting at the end of '26, beginning of '27. What do you want to see to call the year of success? And are there areas of -- if we were to see upside versus guidance, let's say, what would it have been coming from in your opinion?

Yes. So for us, success for me, hit our commitments. That's been my goal for my last four years, lay a very strong foundation on the digital asset side. I think that's something that can really help us accelerate growth as we go into future years, getting the DAN network fully enabled and getting good penetration there, making good headway on pulling capital out of the system.

All that will lay a good foundation for the future. What could be a surprise this year? I could see a world where stable card or the digital asset network hit the ground running out of the gate and generate a bunch of revenue. I don't have much baked into my outlook for that. I do have an expectation of it in my 2028 guide, but I don't have an expectation of getting a lot this year early.

All right, guys. Any questions from the audience? I think there's one in the middle. I just get a mic real quick.

Specific to the retail business, there seems to be a bit of a mix shift as you are retaining these customers who are looking to avoid the remittance tax. And so that means more debit payments at the point of sale, more prepay payments at the point of sale. Can you talk a bit about how that maybe flows through in terms of unit economics? And is there any meaningful change to.

Yes. So from a prepaid card standpoint, if it's our prepaid card, we're actually making more because we get to make the interchange. On the debit card side, there is the normal interchange fees you'll have with that. It does allow us to save on banking fees. So typically, today, we already incur costs related to making deposits and having accounts open and all that. It will negligibly increase our expenses related to those transactions, but we do think it's going to make customers stickier. So over time, it will improve lifetime value.

Other questions? All right. Why don't we wrap it up there? Guys, we have a break for about 20 minutes. So please get some coffee, get some refreshments, lunch and then be back at 12:25 for an amazing panel on venture capital and private equity.

Good day, and welcome to The Western Union Fourth Quarter 2025 Results Conference Call. [Operator Instructions] 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 2025 Results, 2026 outlook, 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 2025 Form 10-K, which will be filed later today, 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 these 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 morning, and welcome to Western Union's Fourth Quarter 2025 Financial Results Conference Call. It was great to see many of you at our Investor Day last fall for the launch of our Beyond strategy. We are excited about building a Digital First, Retail Enabled, Consumer Services Company that is powered by payments and innovation. We remain optimistic about the longer-term outlook for our business as we believe our core retail remittance business will improve as migration patterns normalize, and we work to increase both our revenue and share gains in this important market.

We believe that our focus on becoming market competitive, driving productivity, expanding our payments capabilities and growing share within higher-growth corridors and geographies is the key to delivering on this vision. A key element of our strategy has been to build everyday financial services that can leverage our global brand and our extensive payment capabilities. As these products and services gain critical mass, they will moderate some of the swings we have seen in the core remittance business as they tend to be less correlated with immigration trends. As witnessed in this quarter where our Consumer Services business continued to perform which allowed us to report a reasonable quarter against a difficult macro backdrop, demonstrating the benefits of our global and now multiproduct business model.

For the fourth quarter, we reported revenue of $1 billion. On an adjusted basis, this was a decline of 5% year-over-year. Consumer money transfer transactions were down 2.5% in the quarter and cross-border principal growth was up on a constant currency basis, speaking to the resilience of our customer base and their perseverance in the current macro environment.

In this quarter, we again saw incremental improvement in transactions as Q4 was better than Q3, coming off of the lows that we saw in the second quarter of 2025. We continue to focus on operational efficiencies as we seek to benefit from our scale. This strong operational focus allowed us to deliver at the top end of our earnings guidance this year even in the face of these macro-driven revenue headwinds.

Adjusted earnings per share came in at $0.45 compared to $0.40 this quarter a year ago. Our retail business in the Americas continued to face headwinds associated with the current geopolitical environment. And while it may be too early to say that we have reached bottom, we are potentially seeing some stabilization. We did see strong performance in many corridors and geographies offset by continued weakness in the Americas across several large corridors, most notably U.S. to Mexico. Although from a transaction growth rate perspective, the U.S. to Mexico quarter improved hundreds of basis points relative to the third quarter.

Our branded Digital Business increased transactions 13% and adjusted revenue by 6% in the quarter, with gains driven by some of the new relationships that we have recently signed in the Middle East earlier in the year. Consumer Services adjusted revenue was up 26% in the quarter and roughly 30% for the full year, driven by growth in Travel Money led by Euro Change as well as growth in our bill payments business. We expect Consumer Services to have another strong year in 2026 as our Travel Money business is expected to approach $150 million in revenue, up from nearly nothing a few years ago. We see a market opportunity for a globally branded Travel Money franchise as the market remains very fragmented and some of the prior large global players have retreated since COVID.

Given the strength of our brand, our global footprint and strong retail distribution, we believe there will be many more opportunities for geographic expansion. A hallmark of the company for many years has been a strong commitment to returning excess capital to shareholders. Over the past year, we delivered again with above-average industry margins and a return of over $500 million via dividend and share buybacks. I am also excited about the capabilities we've been building on the M&A front. The deals we were able to do in 2025, and I now look forward to welcoming Intermex into our family, hopefully, in the second quarter of this year. Matt will discuss our fourth quarter results and 2026 outlook in more detail later in the call.

Switching briefly to the macro environment. While economic conditions globally remain reasonable with inflation rates declining in key markets around the world, and GDP outlooks remaining relatively strong. The landscape for human capital mobility continues to shift each and every day. For example, in the last quarter, we saw an election in Chile that will have implications across the region for immigration and mobility. Also a change in leadership in Venezuela for which the implications are still being assessed. These kinds of macro conditions provide a dynamic and constantly changing environment for our business. While we expect them to stabilize over time, in the near term, we believe that companies with larger and more global operating models are better positioned to withstand disruption in any individual country or region.

On the policy side, the U.S. remittance tax went into effect on January 1 for all cash-based international money transfer transactions originated in the United States. I would like to take a brief moment to call out the strong work our team did and the flexibility of our new retail platform that enabled us to implement attacks across all our channels and all our partners flawlessly. We have received positive feedback from both send and receive side partners on our relative execution.

With that said, through the first 6 weeks of this year, we have not seen a material impact on our business, but we continue to monitor the situation closely. Since the beginning of the year, however, we have seen an uptick in our prepaid cards and our V-Go Money Wallet. We launched the V-Go Money Wallet in the U.S. in March of 2025, since then, we have onboarded over 30,000 customers and have a couple of thousand weekly active user base now. An important note here is the vast majority of these customers are the result of a money transfer redirect. We have spent very few marketing dollars on customer acquisition. This is a powerful and effective approach to building our digital wallet customer base. These payout customers who traditionally have taken their money and left Western Union are now becoming weekly active users who are frequently using their debit card at points of sale and about 1/3 of them are initiating new international money transfer transactions. While these numbers remain small compared to the scope of our overall U.S. business, they do highlight the power of the model we are building.

As you know, the U.S. wallet is an extension of our broader wallet strategy. Our goal is to create a 2-sided network that makes it easy for our customers to move funds cross-border while staying within the Western Union ecosystem. In addition to our U.S. wallet, we are continuing to see strong results out of our wallets in both Argentina and Brazil. In Brazil now, we have onboarded roughly 20,000 customers since our launch in May of last year. And in the most recent month, we have redirected roughly 5% of all inbound transfers to the country into our wallet. This saves commission expense as well as gives us an opportunity to increase retention and potentially monetize our receiver base like we are seeing in the U.S. as referenced above.

For context, in Argentina, which we launched earlier than Brazil, we are now up to 17% of all inbound remittances ending up in our wallet in that country. We have anticipated launching a wallet in Australia later this year, and we continue down the path of developing a wallet for Mexico as we await regulatory approval for our pending acquisition. In addition, we believe that we will see an expansion of our wallet capabilities in Singapore, the Philippines and potentially Israel as well, all in 2026.

Since the beginning of 2026, our sale of prepaid cards has also gone up with now over 1,000 agent locations enabled to sell prepaid cards we are seeing a market-driven increase, which we believe may be because of the remittance stacks. Linkages between this consumer services product and our core business are high with over 30% of all transactions being Western Union money transfers and 60% of newly loaded cards being used to send a cross-border remittance with Western Union.

Two years ago, we began a program to enable digital payment acceptance in our point of sale for retail agents. We firmly believe that the retail experience and value proposition is more than just being about cash. It is about the trust needed for an important transaction that comes from personal assistants in-language, culturally appropriate communications and high-quality service in the event of an issue. As more and more of our customers have access to payment and banking products, we need our retail systems to support card-based payments. The passage of the remittance tax has accelerated this transition in the U.S. with debit cards now accounting for 15% of all retail funding in the U.S. in the month of January on our Western Union point-of-sale system. This is up materially over the last several months.

Another focus in the U.S. market in the quarter was U.S. to Mexico. The team has been working hard to identify market and agent segment opportunities to focus on, driving promotions and pricing strategies and increasing our digitally directed payout services. That said, while it is still negative on a year-over-year basis, we are beginning to see improvements on a quarter-over-quarter basis with last summer being the low point. And while corridors like Mexico, Venezuela, Ecuador, Nicaragua and Colombia continue to decline. We have begun to see transaction growth in the quarter to a number of other important corridors, including Brazil, Guatemala, Jamaica and the Philippines. The Bank of Mexico data would seem to indicate that the worst may be behind us with principal growth in the most recent reported month going slightly positive on a year-over-year basis improving materially from the summer lows, although there may have been some pull forward in that number as customers look to move money ahead of the implementation of the U.S. retail remittance tax.

Despite these short-term headwinds, we believe the long-term trajectory remains clear. Global migration is not disappearing. It is adapting. People will continue to move in search of opportunity, education and family and Western Union will continue to provide trusted compliant and accessible financial services. As the market continues to evolve, we continue to see a shift towards the digital channel particularly among younger and more technologically savvy customer cohorts. This varies by region and country, but the trend is generally consistent globally. It does not mean, however, that a growing digital business necessarily means a shrinking retail business.

In Scandinavia, for example, a region that is highly digital and has nearly eliminated the use of cash. Our retail business grew transactions and revenue double digits last year. What does it mean? What it does mean is that the most attractive and growing part of the market, we will have to be able to compete with digital natives, that do not have the complexity or the history of a large retail business.

To do this, we believe we have 2 real sources of competitive advantage. First, we see our strong brand recognition and the large base of existing customers as the key building blocks to cost effectively build our digital business without having to overinvest in non-scalable marketing expense. Second, our unit economics for key functions like compliance, tech, network management, payout costs and customer service benefit from our overall scale as the largest remittance player in the market. Now that we have largely achieved price competitiveness we believe these benefits can be more easily transferred into competitive advantage. In the end, there will only be a few players that will have the scale to effectively compete on a global basis digitally. We believe we are well positioned to be one of them.

To capture this opportunity, we have to deliver a digital-first customer experience throughout the entire journety across the majority of our markets. With the launch of our Beyond platform in 2025, we believe we now have the infrastructure to achieve this goal. We are planning to have all of our markets on the Beyond platform by the end of 2027. This will be a meaningful acceleration to the work that we have been doing to modernize our technology and experience over the past 2 to 3 years. Second, we need to translate our brand strength and market presence into scalable gains in new customer acquisition. Over the past 12 to 18 months, we have seen a flattening of our customer acquisition trends outside of the Middle East and we need to improve upon that. These opportunities will be accelerants to our digital business, which has now grown in transaction double digits and revenue mid-single digits for 2 straight years.

Our digital business now accounts for over 40% of the principal we send around the world. And as the world continues to move more digital, we will continue to move right along with it. You see this with our payments network, where we have made meaningful progress in creating one of the largest at scale funds in and funds out platforms anywhere in the world. Today, we have over 300 funds in types that we support and billions of accounts and wallet endpoints in our digital funds out network. We are using this network not only to drive both our retail business and our digital business, but to launch new businesses like our recently announced digital asset network. As a matter of fact, I just returned from a trip to Dubai to visit some of our large partners in that region. There may not be a region in the world that is moving to digital at a more rapid pace than the Middle East.

Last year, we announced 2 partnerships in the Middle East to complement our existing business there. As you know, these markets are difficult for traditional MTOs given the restrictive ownership and [ licing ] requirements in most of these Middle Eastern countries. These partnerships are with well-known digital native brands who have accumulated large customer bases and essentially function as super apps or financial ecosystems for their customers to provide a wide range of telecommunications and financial services. We are pleased to be partners with these institutions and offer them the benefits of our payout network and our scale that few others can match, which enables us to win their business.

Next, I would like to provide a quick update on our digital asset strategy. At our Investor Day a few months ago, we laid out an ambitious plan to use our assets in new and unique ways and to become a more meaningful player in the digital asset economy. Over the last few months, we have successfully minted our first U.S. dollar payment token, US DPT and have moved it between our treasury department and our agents wallets. These pilots are focused on leveraging on channel settlement to reduce dependency on legacy correspondent banking systems, shortened settlement windows and improve our capital efficiency. We see significant opportunities for us to move money faster and at lower cost without compromising compliance or customer trust.

These milestones put us on a path to meet our expectation of offering our payment token to the market by the middle of this year. I'm happy to report that we remain on schedule and we were looking forward to our market launch.

Finally, we are expanding our partnerships and capabilities to allow our customers to move and hold stable coin digital assets and to allow them to have more control in how they manage and move their money. In many parts of the world, being able to hold a U.S. dollar-denominated asset has real value as inflation and currency devaluation rapidly erodes an individual's purchasing power. We are working with [ Rain ] and Visa to bring the first US DPT stable card to market and are targeting an initial launch of more than a dozen countries later this year. I look forward to continuing to update you on these initiatives as the year progresses, and we are excited about the opportunities in front of us.

Finally, I would like to take a moment to highlight several new agent wins. Over the last 2 years, we have invested heavily in modernizing our retail technology platform making both integration and ongoing experience management significantly easier. We believe our partner OS platform is now the gold standard in the industry for large retail networks. Combining these improvements with our move to a more competitive consumer value proposition and the extensive work we have done on our agent support model, we are seeing renewed momentum and interest from large distribution networks.

A little over a month ago, we put an announcement out that we have re-signed the Deutsche Post. This was 1 of the 2 significant European agents we lost a couple of years ago as they made the decision to exit the remittance business. With our improved market position and capabilities, Deutsche Post has decided to return to the remittance business with a multiyear exclusive relationship with Western Union and a planned relaunch sometime in the middle of this year. This will be a great addition to our German business, and we look forward to offering our services across the Deutsche Post network.

Second, we recently signed an exclusive 5-year contract with Canada Post. This is a new win for us and a competitive takeaway Canada Post is expected to begin offering Western Union service in the majority of its 5,600 locations in the coming months and we look forward to servicing our Canadian customers throughout the post extensive network. This win should help bolster our North American business and provide a substantial retail network across Canada.

Third, we have recently signed a long-term exclusive contract with the California grocery store chain Vallarta Markets, which caters to the Latino community across the state. This is a new relationship for Western Union, and we look forward to offering our services to customers and Vallarta locations.

Lastly, we announced at Investor Day, we have gone back to being exclusive with Kroger for Money Transfer. This builds on the 40-plus year relationship we have had with the company. We look forward to continued collaboration and are excited to see now what we can accomplish together in this exclusive partnership. With these partnerships that I have discussed today, we expect at least an incremental $100 million of retail revenue per year when fully ramped. I am excited not only about these 4 opportunities, but about the future prospects as our pipeline continues to remain robust.

The changes we have made to our retail technology platforms, our agent support, our improved pricing and our leading payout network has put us in a position to grow our agent base for the first time in several years.

In closing, I want to reiterate our confidence in the path we're on. Western Union is transforming, becoming more digital, more agile and more aligned with the evolving needs of our global customer base. We are expanding our product suite. Modernizing our platforms and unlocking new opportunities for growth across all of our channels. We are positioning Western Union to lead in the future of cross-border and accessible financial services across the globe. It is a privilege to be the CEO of this wonderful and now 175-year-old company. I am proud of what we have been able to accomplish so far.

I would like to thank our Board of Directors for their continuing support and our combined commitment to drive shareholder value. I would also like to thank my leadership team and our nearly 10,000 employees for their laser focus on delivering for our customers even in these tough times. Thank you all.

I will now turn the call over to Matt Cagwin, our Chief Financial Officer.

Thank you, Devin, and good morning, everybody. I'm delighted to be here today to walk you through our Fourth Quarter and Full Year results as well as our 2026 financial outlook.

For the full year, we delivered GAAP revenue of $4.1 billion. Adjusted revenue came in below our outlook, reflecting ongoing industry disruption. Adjusted revenue growth, excluding Iraq, was down 2%, driven by growth in Consumer Services and Branded Digital, offset by the Americas Retail business.

In the fourth quarter, GAAP revenue was down $1 billion, and our adjusted revenue was down 5%, driven by our Consumer Services and Branded Digital business offset by the Americas business, which continues to struggle with macro headwinds. The deceleration relative to Q3 was largely due to the slowdown in consumer services as communicated last quarter. In 2025, our full year adjusted operating margin was 20%, up from 19% in the prior period. Adjusted operating margin in the quarter was 20% compared to 17% in the prior year, benefiting from our continued cost discipline. For the full year, we delivered adjusted EPS of $1.75 in which benefited from higher adjusted operating profit and fewer shares outstanding, offset by higher interest expense, which landed us at the top end of our guidance range of $1.65 to $1.75.

Adjusted EPS was $0.45 in the fourth quarter compared to $0.40 a year ago. Adjusted EPS benefited from our cost management discipline as well as fewer shares outstanding partially offset by higher interest expense. The adjusted tax rate for the quarter and the full year was 12% and 13%, respectively, consistent with the same prior year.

Now turning to Consumer Services, which contributed 14% to total revenue this quarter. Fourth quarter adjusted revenue grew 26% driven by growth in our Travel Money business as well as growth in our bill pay business. I'm pleased to share that in 2025, adjusted revenue from Consumer Services grew almost 30%, we continue to believe that our Consumer Services business will grow double digit annually over the next several years. This growth will come from continued market expansion of existing products as well as potential new product offerings and through inorganic growth strategies that can benefit from Western Union's brand, scale and global nature of our business.

As Devin highlighted, we are continuing to evolve our portfolio, moving beyond remittances to build a broader suite of consumer services. Travel Money demonstrates what's possible. In just a few years, we've grown from a few million dollars to over a $100 million business and we believe there's more to come. This illustrates the power of our brand, global footprint and unique capabilities.

Now transitioning to Consumer Money Transfer or CMT. For the full year, CMT adjusted revenue, excluding Iraq, was down 6%, while transactions excluding Iraq, declined 1%. In the fourth quarter, CMT adjusted revenue declined 9%, while CMT transactions declined 2%, driven by the slowdown in our retail business as industry conditions remained challenging throughout the quarter. U.S. immigration policies have continued to impact customer activity. These dynamics have been present for most of the year and remain a factor in our results in the fourth quarter. Customers continue to send fewer transactions but with higher average principal per transaction.

Our PPT increased roughly 5% in the fourth quarter compared to the prior year on a constant currency basis. We see this as a new normal for the industry. And in the short term -- we see this new normal in the short term, and we continue to look for ways to improve in this environment.

In the fourth quarter, our Branded Digital business grew adjusted revenue by 6%, with a 13% increase in transactions. This marks the ninth straight quarter of solid revenue growth. Our performance in this environment reinforces our confidence in the Western Union brand. We have also seen strong Branded Digital transaction growth across the globe, underpinned by the Middle East, APAC and the Americas. Account payout transactions continued their strong momentum, growing over 30% in the quarter.

For the full year, adjusted revenue grew 6% and transactions grew 12%. As Devin highlighted, a big contributor of branded digital growth over the past couple of quarters has come from some of the new digital partnerships in the Middle East. These relationships have led to a substantial growth in transactions but a more muted growth in revenue as they are primarily account-to-account transactions where revenue per transaction is lower than our traditional Western Union license business. This will likely cause a spread between transaction growth and revenue growth to remain elevated. We are even likely to see an increase in transaction growth rate over the next couple of quarters as these partners are gaining real traction in the market.

Turning to our retail business. Overall, the performance in our retail business was similar to Q3 on a transaction basis and slightly worse on a revenue basis. We will continue to see softness in North America. But from a growth rate perspective, North America transactions improved a couple of hundred basis points in the fourth quarter compared to the third. Although some of these improvements may have been pulled forward ahead of the new remittance tax as it went into effect on January 1. APAC also improved in the fourth quarter from a revenue growth rate perspective, while Europe, Middle East and LACA slowed slightly.

Now turning to our cash flow and balance sheet. In 2025, we generated $544 million in operating cash flow compared to $406 million in the prior year period. Included in this year's number is approximately $220 million in cash taxes paid related to the transition tax. We're excited to have these tax obligations behind us and look forward to the additional flexibility that we will have to invest our free cash flow in support of our business or to return it to our owners.

Western Union continues to be a cash flow machine with adjusted free cash flow conversion of over 100% for the past 3 years. In 2025, our CapEx was $151 million up 15% from the prior year. CapEx increased slightly due to higher technology infrastructure spend and a busy year in new agent wins and renewals, which drove a slightly higher CapEx number. We expect CapEx to remain elevated in 2026 due to the strategic wins and the addition of Intermex.

We continue to maintain a strong balance sheet with cash and cash equivalents of $1.2 billion and debt of $2.9 billion. Our leverage ratios were 2.9x and 1.6x on a gross and net basis, which we believe continues to provide us ample flexibility for capital return or potential M&A while maintaining our investment-grade credit rating. I'm pleased to report that in 2025, we returned more than $500 million to our owners with $305 million paid in dividends and $225 million used to repurchase shares.

Now moving on to our 2026 outlook, which assumes no material changes in macroeconomic conditions. Our adjusted revenue outlook for 2026 is for 6% to 9% revenue growth inclusive of Intermex which we now expect to close in the second quarter of this year. Our adjusted EPS for the full year, we believe will be between $1.75 to $1.85. This includes higher interest expense as we look to refinance our existing notes coming to maturity in Q1, which are currently yielding 1.35% to something closer to today's interest rate environment. This also assumes roughly $100 million of stock repurchases for the full year as we look to integrate Intermex and potentially execute our robust M&A pipeline.

We believe that EPS will accelerate as we go throughout the year as our Travel Money business is seasonal. It has less fixed cost coverage in the first and fourth quarter of the year. In addition, some of our expense benefits related to incentives that hit in Q1 of 2025, will occur later this year. In both the benefits of our operational efficiency programs announced at the Investor Day, as well as the benefits related to Intermex integration will ramp as the year progresses.

Thank you for joining the call. And operator, we're ready to take questions.

[Operator Instructions] Our first question comes to us from Tien-Tsin Huang at JPMorgan.

Thanks for going through all of this. So I'm just trying to -- I'm thinking what to ask here. So maybe on the outlook with just January and February trends that you talked about. I'm curious how that informs your outlook in terms of what you learned. It sounded like there's no real impact yet from the [indiscernible] so far, but you're monitoring what's happening across a lot of different countries, including Venezuela. So what's baked in the outlook in terms of assumptions?

And I'm very curious on what you're assuming for Intermex in the outlook in terms of either contribution or impact from some of the trends that you're seeing in the early part of the year?

Tien-Tsin, thanks for joining the call so early in the morning. A couple of things here on your question. So we are 6 weeks into the year. We are seeing an improvement relative to our Q4 performance 6 weeks into the year. As you know, we saw the slowdown in the Americas, in particular, the U.S., starting in the second quarter of last year. So we'll start to lap those harder comps we have here in Q1 as we get into Q2, 3.

So all that will make the continuing progress we've seen in the first couple of weeks, get even easier as the year progresses. And then as far as Intermex concerns, they have not published yet, so it's not fair for me to give their numbers, but you could imagine their North America-centric business. So the results are largely consistent with what you've seen both in our results today and largely consistent with what Euro net published, something on that line will give you a good sense of where they are, and we factored them into say Q2 close. So you can think about the middle of the quarter.

Middle of 2Q. Got it. And then just my follow-up then. The retail agent wins stood out to me. It sounded like many were exclusive. Devin, you talked about $100 million incremental revenue, one's fully ramped. A couple of questions there. Just it sounds like there's a pipeline for more of these deals given your distribution. Correct me if I'm wrong there. And I'm curious, is there anything to share on the cost for this exclusivity and maybe the margin profile of these deals, if there's anything different than what we've observed in the past.

Thanks, Tien-Tsin. We are excited about it. They are exclusive deals, which is part of the strength of the Western Union brand in model with large strategic partners. We believe that these will be meaningful as they are largely competitive takeaways, so they benefit both our inbound and our outbound. So in the example of Canada, adding incremental distribution. This is similar to what we saw when we added the U.K. Post, adding incremental distribution, particularly in some of the less metropolitan areas will increase inbound into Canada. We saw that also when we lost the Deutsche Post again, which has great coverage in the nonurban areas, we saw inbound to Germany go down.

So for us, these kinds of networks not only benefit outbound in the country, but help our global model and our global footprint because they provide important payout services in places where it's difficult to sustain an independent agent on money transfer remittance kind of revenue only. So we see them both as a network benefit overall, but also as great partners with great brands in these markets. Matt can talk about the economics, but they are generally consistent with our overall branded large network economics. So these are not deals that we bought. These are deals that we won based on strong value proposition, good technology and great partnership.

Let's build on Devin's point for 2 things here. I think what it's closing was there's probably if you take away 2 takeaways on this. We alluded a quarter ago or maybe 2 now about a pipeline building. These are -- we knew these were well on the way at that time. We put a lot of money into rebuilding our retail platform and having what we believe to be the gold standard now in the marketplace. So we believe this will be the first of many coming over the next 2 years.

And then from a margin standpoint, you should view this, Tien-Tsin, is it will contribute to our overall OI. So it's better than our OI.

The other thing, Tien-Tsin, in my tenure, it's great to talk about adding so that instead of talking about losing. So it's a great transition for us.

Our next question is from Darrin Peller at Wolfe Research.

Can we touch on the digital transaction growth for a moment? I mean, I know -- it's good to see the 13%, and I know that you wanted to see that even accelerate over to the mid-teens over time. But we're also -- I'd like to hear more about your view of what you're doing there to keep that sustainably in that rate or better. and your conviction around that. But I'd also love to hear more about the spread. I know at the Investor Day, we talked about that spread narrowing a bit. You touched on it earlier in your prepared remarks.

So maybe just revisit that again, if you don't mind, I mean, what should we expect on the spread between the transaction growth and the revenue growth rate there? And what's driving the spread now still a little bit wider?

So Darrin, let me take the transaction and the potential for acceleration and then I'll let Matt take the spread question. By the way, thanks for joining early in the morning. We see market opportunities. So we are excited about our business now in the Middle East. For many years, we had a tougher Middle Eastern product and platform and strategy. Licensing is tough in those markets. And so we went to market with a model we call the digital master agent, which was really one of our retail agents partnering with us to try to do digital.

We still have that model, but we've expanded our model again with the improvements in our technology platform to be a bit more partner aligned with some of the larger digital players who have amassed critical mass of customers in that region across a wide range of products, telecommunication, financial services. And so it's opening up for us a market opportunity and a customer base that we had trouble accessing in our old digital master agent model in the region. So we see potential there to accelerate.

We also see regions in the world like in Europe, where we believe we are underperforming the market and with some changes in the approach, model leadership, we'd like to see some acceleration there, which again would be additive to the current results that we're publishing.

I'll let Matt talk about the gap.

We actually alluded to this last quarter, our Q3 as we were ramping these partners, the gap would be wider for the year as we ramp it. Devin also had in the prepared remarks a minute ago, we've seen our new customer and our non-Middle Eastern business growth narrow a little bit, flat line. We are working hard on that to get it back. That will get the core non-Middle East to accelerate and narrow the gap. But as the Middle East is contributing to this, it is what's causing the widening.

The other thing as you know is we launched the program, I guess, been now 2, 3 years ago where we did the new go-to-market strategy, is that happen, we saw each region we went to accelerate and grow in the last part of that really is the Middle East where we're doing through partners. So -- and then they come to RPTs.

Okay. All right. That's helpful. And just a quick follow-up would just be your comments around what you're seeing with regard to the corridors impacted by migration policies in the U.S. Just I want to make sure I understand it. Are you saying that it's gotten to a point where you think it's now stable. Maybe it's a little bit better. We see a new norm in Mexico, for example, was stabilizing. I mean I know it's pressuring transactions, especially on the retail side. But do you think we're at a new steady state now? Or I'm just curious where you're seeing the data.

Yes. So we -- the summer was pretty dramatic. Bank to Mexico [ Data ] was negative. In 2025 for the first time, Darrin, in over a decade. And so it's a tough situation, and it's an important corridor for us given its relative size. And so we pay a lot of attention to that. We did see it turn positive at the end of the year, and we're continuing to see some reasonable trends in the first part of this year. That's had it does, as evidenced on the chart, jump up and down. October was starting to head in the right direction and then November fell off a cliff, December came back pretty well.

So we think that is moving directionally in the right direction, and now we have a couple of months in a row that look a little bit better. It's not where it was. Historically, it's growing mid-teens month-over-month, quarter-over-quarter, year-over-year, but at least it's not descending at mid-teens like it was in the summer months. The rest of the LACA regions is becoming a bit mixed, right? And so we see certain markets like Nicaragua, where we're still seeing reasonably low performance and others that are starting to stabilize and in some cases, even begin to grow again like the Guatemala.

So I think we're seeing stability. But again, as I said in the prepared comments, any given day, an election or a geopolitical change can happen that disrupts the region again for another 3 to 6 months.

Our next question comes to us from Will Nance at Goldman Sachs.

I wanted to just ask the digital question in a slightly different way. I mean it sounds -- I totally hear you on the Middle East and some of the mix shift dynamics you're expecting around the spread just relative to the revenue growth rate that you just saw when you put all the moving pieces in a blender, like how are you thinking about absolute levels of digital revenue growth over the course of the year?

And then I'll just ask the second question now, but I was wondering if you could put a finer point on the [ IMXI ] revenue assumptions assumed in the guide for the closing just so we can kind of true up the models ahead of the close.

I put those 2 tough questions together. So on the branded digital side, what are we expecting, what's built into the guide. We've now had 2 years of mid-single-digit growth. We have built into our guide a modest improvement in that. We think there's meaningful improvement opportunity, but our guidance includes a very modest improvement driven by -- we think we're going to continue to accelerate in the Middle East, and we think we can reinvigorate our growth rates for new customers in many other markets.

On the Intermex side, we have built into our model a Q2 close as I talked about with Tien-Tsin a minute ago, you can view that as something closer to the middle. And we've assumed a growth rate is commensurate with our North America [ Orias ], North America business growth rate. So you look at industry growth rates for that.

Our next question comes to us from Rayna Kumar at Oppenheimer.

So I also want to ask about Intermex. I think you guys put out a $0.10 a share accretion number for the first year. Do you still expect to hit that target with Intermex. And I'll ask my follow-up as well. You had some nice commentary on is the partnerships and products you're adding with stable coin. I'm wondering if you're actually starting to see some demand from consumers to send stable coin. And are they utilizing the on and off ramping for stable coin?

Rayna, thanks for joining the call today. To your first question on Intermex, when we had the announcement later part or middle of last year, what we had indicated at the time was a $0.10 from the first full year. And our thought process there is we need some time for integration. There's a meaningful amount of synergies that we are confident we can go get. We're more confident today in those synergies than we were when we signed the deal because we've had a lot of time to do some integration planning.

The deal is coming a few months earlier than we thought right now, subject to regulatory approvals, there's still a few states that get approved in one country from a change of licenses, all the competition stuff of material substance is done, but there is a few more lingering regulatory things to go. With the deal coming a few months earlier, it will be accretive this year. It's in our $1.75 to $1.85 but the $0.10, you should view more as a 2027 activity for us as we get the benefits of all the synergies that we're working on.

Let me try to take the stable coin question. As you remember from Investor Day in the prepared comments, we are most bullish on the use of stable coins to create efficiency in the global movement of money, particularly between us and our partners to increase speed allow us to move money 24/7 and for Matt to get capital efficiency out of that process.

I also talked about launching the stable card which we believe doesn't require senders to necessarily choose to open a digital asset wallet, by a stable coin, send a stable coin, it will enable a traditional retail or digital center to have their customer receive a stable coin-based asset in the stable card, which we believe has value in our remittance countries for allowing the receiver to have more control over exchange rates and the ability to hold a U.S. dollar-denominated assets. We have not seen strong market demand from our center-based clamoring to send money via stable coin.

We have, however, seen and we believe that this is a market opportunity for us people who already have customer bases with digital asset wallets are looking for ways to exchange those digital assets back into [ fiat ] currencies. And so what we've talked about is our digital asset network, and we continue to sign partnerships with existing digital asset players who own digital asset wallets and customer bases looking for those on-ramps and off-ramps. And so that's another part of our digital asset strategy that's coming along, and I will talk about more about that on the next earnings call.

Our next question is from Timothy Chiodo at UBS.

So you mentioned a few times now around some flattening of your customer acquisition trends outside of the Middle East. I was hoping you could dig into this a little bit more on 2 levels. One is a recap of some of the initiatives that you have to address that flattening. But also, what are you seeing in the competitive environment, whether it's around advertising spend or promotions or other initiatives that might be impacting that flattening of customer acquisition that you mentioned.

Thanks. Great question. I think there are 2 things that have transpired over the course of, call it, the last 12 to 18 months. The market for value propositions for new customer acquisitions has gotten increasingly competitive as global macro forces have put pressure, particularly on lower scale players, you're seeing aggressive -- increasingly aggressive new customer offers.

And so one of the things that we're evaluating is how do we compete with that and still maintain our rigor in terms of our ability to have the high returns on acquisition cost to lifetime value. And so we're looking at how some of our models work and how we are going to go to market compete with these more aggressive new customer acquisition offers.

The second thing that we're seeing is has search is changing and a genetic AI and how people go to market, the traditional model of buying lots of space on Google or in the Apple store is a shifting landscape now in terms of how you gain access to customers and where those customers are actually shopping and looking for opportunities to send money. And so we are shifting our go-to-market strategy to align better with the kind of emerging landscape for digital customer acquisition.

Our next question comes to us from James Faucette at Morgan Stanley.

Appreciate all the details and color here. I wanted to follow up a little bit just on recent trends. As you mentioned a lot of volatility in the latter months of 2025. How do you think about like what are the kind of primary drivers there? And just trying to think about the things that you're looking at to extrapolate out for the rest of this year, especially given the month-to-month volatility.

Great question. I think the month-to-month volatility has caused us to have a much more dynamic operating model. So Historically, this was a relatively predictable calendar-driven, holiday-driven, paycheck driven business. And many of us have publicly said that we could pretty much tell you what the next week, month, quarter was based on trends and the calendar. With some of this more dynamism in terms of the landscape, we have to be a lot more agile, recognizing where the trends are moving and shifting both our approach to go to market but also in some cases, our model for agent incentives and/or for marketing dollars to recognize where the strengths are and start to quickly address where we're seeing market change is on a much more dynamic basis.

But it has become the new normal for us. And so we are doing the best we can in this new normal to adjust our operating model to a more dynamic approach to dealing with it.

If I can just take one step back to build onto Devin's answer. You have to keep in mind the fact that we are global. We're in 200 countries. So we do have some puts and takes. The conversation we're having right now is a few countries in Latin America, U.S. and Mexico, which has been up and down over the last 6 to 9 months. Holistically, it's been very similar across the U.S., the Latin American corridor starting in Q2 last year. So we will start to lap that as we get into the second quarter and start having easier comps.

So any given market is volatile. The economy as a whole to a step down in Q2 for this industry and we will start to lap that as we get into the second quarter.

I appreciate the nuance there and color. Just want to ask quickly to -- if you could compare and contrast a little bit around the European retail versus U.S. business. And in particular, I'm trying to get a sense from you how you think about what a realistic time frame is to transition the U.S. model to look more like Europe and maybe more importantly, at least for me and modeling purposes, what investment is going to be required?

Thank you for the question. The important impetus to transforming the U.S. model as we've talked about publicly, is the close and then the integration of Intermex into Western Union. The Intermex model, as we've said publicly, is very similar to our European model with a much more tactical location-based strategy that relies on kind of agent level and corridor level activities and strategies.

And so with the a little bit of acceleration into the second quarter from our original belief on when the deal would close, I think that helps us move forward in terms of the transformation of the North American and particularly the U.S. retail business.

Our final question is from Bryan Keane at Citi.

Hi, guys. Thanks for all the details here on the call. Just want to ask about Consumer Services growth. Obviously, that's been the strength and powering a lot of the top line. Can you talk a little bit about what we should expect for growth rates this year and some of the key driving factors?

And then I'll ask my second question. I think Matt, what people are trying to figure out is the actual revenue dollar amount assumed in the Intermex transaction. And then maybe just what that means for organically the business this year ex-acquisition?

So Bryan, I'll work my way backwards. On your second one, the simple answer is our organic is going to be close to flattish. And then Intermex will help us get closer to the 6% to 7%. We think we'll get some positive growth, but call it flattish.

And then for your question on Consumer Services, we have our last quarter of the acquisition we did last year, which will help power Q1 to be very solid from a consumer services standpoint. And then I intentionally talked about, we see a path for double-digit growth going forward as we continue to expand products as we continue to look at inorganic activities and we expanded in new marketplaces. So view it as higher in Q1 and then working its way down closer to our double digit. And then you may have some tuck-ins as the year progresses.

Thanks, everybody.

There are no more questions in the queue. Thank you for joining The Western Union Fourth Quarter 2025 Results Conference Call. We hope you have a great day.

All right. Good afternoon, everyone. Thank you for joining us here. We are in the afternoon session of the Tuesday session of our Arizona UBS Global Technology and AI Conference.

We're really fortunate to have with us today the CFO of Western Union, Matthew Cagwin. Matt is also joined here by Tom Hadley, who is Head of Corporate Development and Investor Relations.

So the first thing we want to do is make sure we say a special thanks to both Matt and Tom for traveling here to Arizona and being a part of our event now for many years in a row. So thank you.

Awesome. Thank you, Tim.

All right. Beautiful. We're going to start out with one of the key phrases from the recent Investor Day. We were glad to join you in New York not too long ago. But one of the key themes coming out of the Investor Day was the concept of beyond remittance, right? So you talked a little bit about leaning into some additional areas beyond the traditional core business, and I thought it would be a great place for us to start.

Well, Tim, I appreciate the question. We just had our Investor Day for those that haven't had a chance to spend a wonderful 3, 4 hours listening to it, I'd strongly encourage you. Tim just told me he -- it was a riveting afternoon for him.

Our ultimate title beyond was we've been spending the last couple of years working on finishing the base, evolving beyond what we had. And we're now to a point where we've got a very strong base of consumer service products. We actually grew last quarter by about 49%. We've doubled this business over the last 3 years almost. And we have line of sight through both the white space we have on product expansion, territory expansion to we believe we can double it again over the next 3 years.

So we're really excited about moving beyond remittances. It does not eliminate remittances. That's still the core of our business. It's still $3.5 billion of our overall company. But we think that there's a strong growth prospects for us as we move beyond the core we have today.

All right. Great. A minor follow-up on that. So when we think about some of the beyond remittances categories, what are some that come to mind where you think, yes, we're going to start seeing some real contributions in the next year or 2? What are some a little bit longer term? Maybe just give us some context there.

Yes, certainly. So just a reminder for you and everybody else: If I go back 3 years, we used to call this an Other. We rebranded to Consumer Services about 2 years ago. When I joined the company, it was made up of largely 2 products. It was made up of bill pay in Argentina and the U.S. It was made up of retail money order here in the U.S.

Since then, we've expanded this product to include things like our wallet business, which includes both issuing revenue, float revenue, things of that nature in 8 countries around the world; includes our prepaid business, which we now have in 2 to 3 geographies around the world; includes our media network business, which is used in the white space of our website, apps, receipts and screens within our agent locations.

And then most recently, we've now, in the last 1.5 years, expanded our travel money business, most recently with an acquisition, which closed in very early April Q2, which has allowed us now to get to a point where we have about $100 million travel money business on path for a $250 million travel money business by the end of our 3-year trajectory.

All right. All right, Matt, we're going to move on to another big topic, not necessarily at the Investor Day, but also at the Investor Day, a topic in general, which is the North America retail business and the stabilization of that.

So you have noted more recently some macro-related pressures. You've talked about the large and important market, which is U.S. into Mexico. Maybe just talk a little bit about both the near term for that market and then how investors should be thinking about it recovering and the longer-term prospect?

Yes, certainly. I'm actually going to weave this question with your first one Tom deleted. So you've got a bigger audience today because I told people to come here, we'll talk about Q4 a little bit. So when you think about...

It was deleted. Yes.

He deleted. I can't believe he did that to you. I read and I got excited last night. When you think about our retail business and overall North America business, it's been under pressure the last couple of quarters. We've actually had it stabilized at the same decline now for 2 quarters in a row. That stabilization is expected to continue into Q4.

So we're not seeing a deterioration further in our North America business, which means as we get into the second quarter of next year, we start to lap and get easier comps and start to stabilize as we've gotten into repeatable business there. When you look broader, this is where I'm going to pull your second -- first question back in. When you think about broader, we've seen some strength in the fourth quarter in our APAC business, which we're really excited about.

We've got a new leader we've had there for about 6 months, and he's making some good progress fixing the business. However, we have seen some macro challenges when you look at Europe and Latin America, in particular. Those headwinds have caused us to be -- we talked about on our last earnings call being at the lower end of our revenue guidance. We think we'll be a little bit below that now. But due to strong cost management, we think we still can be at the upper end of our EPS guidance.

Okay. Well, I'm sure we all appreciate that update. All right. Well, a somewhat related topic, staying on that U.S. into Mexico or U.S. into LatAm. Let's talk a little bit about the Intermex acquisition. So clearly, North America retail, that's a part of the story with Intermex. So maybe we just start there.

Yes. So super excited about the asset. I've been monitoring Intermex from the time I started at Western Union. What Bob has built there is an amazing business from nearly nothing 14 years ago to now a $650 million business, that had been growing at high single digit, double digit for many years.

He actually doubled in the last 5. A asset we had admired, but was beyond our willingness because we like retail, we're obviously in it, but wasn't willing to pay the multiple that he was trading at. And the current macro pressures have brought his stock down to a level where we could acquire it for about 5x EBITDA before synergies, closer to 4x after and was an asset we couldn't pass up on.

We've now spent about 4 or 5 months working through diligence, the regulatory stuff. Great news, HSR was painless. The government actually didn't even do -- make us pull it, which was amazing. We're now working our way through the state requirements. We've now filed in all states, got about a dozen of them that have already accepted the change of control.

We're working our way through the international ones, still feel like we have line of sight to closing on the transaction middle of next year. And with the integration work we've done, we feel even more bullish about the transaction than we did the day we announced it.

All right. Great. Well, our team having covered Intermex, we're relatively familiar with it. So maybe just to add a couple of points there on Intermex. Maybe you could talk a little bit about their agent locations and how strong some of those are and what that brings to Western Union?

And then talk a little bit on the platform side and some of the things that they were doing quite well that might be able to be brought over to Western Union. In other words, some of the more operational synergies.

Yes, certainly. So we've got about 10,000 independent agents. They've got about 10,000 independent agents. The overlap is modest. So we do like the fact that we can get further white space in the U.S. When you think about Western Union, the way we like to go to market is we -- think about a pyramid.

The bottom of pyramid is the strategic channel. It's important to have your Krogers, your Walmarts, your business of that size, which provides you across large base, but not as ethnically diverse. In the middle, you got your -- whether it be a Western Union exclusive or whether it be an independent nonexclusive. We are very light in the U.S. on that space.

We had the 10,000, but some of our competitors had more. So this helps us fill out that space there. And then when you get to the top of the company-owned stores, after this acquisition, we'll have about 250 U.S. company-owned stores, which really helps us have the control in large dense markets where you have high volume growth. So we're excited about that footprint.

When you think about their technology, they've done an amazing job building out their agent onboarding. They're able to onboard their agents probably about 1/3 of the time that we do. They've also got an amazing process for how they actually handle calls from their agents. They answer them within under 10 seconds, which provides that strong touch and it allows them to basically have lower commission rates than a business who doesn't because then agents want to trade a little bit for the overall package of how you handle your cash management, how you handle the customer relationship, how you handle the agent-related relationship. So we're learning a whole lot through the work and optimistic that we can bring that to our business.

Excellent. All right. I think we hit North America retail and Intermex quite well. Why don't we move on to another topical item related to Western Union, which is debit acceptance. You've been talking about this a little bit on earnings calls lately. You talked about the experience in Europe, you're bringing it into the U.S.

Let's talk about what it means in terms of cost, transaction sizes and how investors should think about it? And if you don't mind, a brief follow-up just in terms of the -- if you don't mind sharing with us who you're working with and who you decided to partner with on the merchant acquiring side there?

You're really trying to get me to talk about one of your other clients. That would be very nice to them. Let's talk about broadly more so in Europe itself. So we've worked really hard, and this is what the Intermex deal is going to bring in for us. We've worked hard over the last 3 years on -- Europe on getting that pyramid right.

When we started 3 years ago, we had no company-owned stores. We were largely focused on the strategic agents. We lost, as you probably remember, you've been covering us for a very long time, we had lost 2 agents very early in my tenure. And that caused us to go faster in transforming the business and moving more into the independent channel. We strengthened our sales force. We signed up many more new agents.

We got the protocol for how you actually get them to send transactions to us versus our customers -- our competitors better. We worked on how you get to market-based pricing and you update that information on a daily, hourly basis. And all that has allowed the European business to do very strong over the last year. So we're really excited about that.

Part of that was rolling out debit cards. Many of our competitors have used debit acceptance for their transactions for years. For whatever reason, Western Union had chosen not to do that. What we've seen in our European business as we've rolled that out, we've gotten to a meaningful penetration rate for the European business, more than double what it is here in North America.

It's provided more sticky customers. And we've also seen the principal per transaction higher for someone who is a debit card transaction versus someone who's doing cash, which then provides us more revenue per transaction. So overall, very excited about rolling that out.

All right. Excellent. Well, you kind of touched on a little bit of the European success there. You touched on it. Maybe we could just expand a little bit more in some of the -- what are some of the specific retail strategies that have worked really, really well that you're planning to bring into the U.S. market?

Yes. So it's really -- I'd pick on 3 things. One is -- and it's already been rolled out, is our global point-of-sale solution. So when I joined the company, the company had started to move away from retail from an investment standpoint, not from a go-to-market standpoint. And we had a very old antiquated point-of-sale system.

Our product and tech team have modernized that over the last 3 years to the point now we're fully on our new modern point of sale. This point-of-sale allows you to -- I drive a Tesla, I know you drive, but they push out new software updates regularly to me. I can decline it, but they push them out regularly, and it just happens. Our old way was very manual, and it took forever.

You probably remember when I first started on a call maybe about 1.5 years, 2 years ago, talking about how we are rolling out customer lookups, repeat transactions, and we had only rolled out 20%, then we rolled out 50%. And you heard us talk about probably for 2 or 3 quarters before we had to fully roll out to the marketplace.

Now we're in a position with our new point of sale, which is in the cloud, running on a thin file that we can update technology very rapidly. And that's one of the things that we've done. That's a global thing. It's benefited Europe. We're also, as we talked about a second ago, rolling out what type of payment methods you can have both from a funds in, funds out.

But then underlying both those is the sales force. And I actually just -- so while you started early on these meetings, I actually started this morning on a call on our commission structure and how we're going to pay our salespeople to motivate them to do better. And that started in Europe, and we're taking those learnings, and I'm not going to talk about publicly here, don't want our competitors using it.

But what do you do to get them to wake up every morning to drive more transactions per location? And we've got the right people in place, we put training in place and then we put compensation in place. That's been in Europe for now for about 1.5 years is a result of the lost 2 big agents. We're taking that to North America, the call this morning I had was actually the North America rollout of it.

And then the last point was that pricing I talked about a minute ago is getting the market-based pricing. We talked about in our Investor Day, it's now somewhere 50% to 70% rolled out in Europe. I think it was 70% rolled out in Europe. We're now working that on a handful of cities in the U.S., and we're continuing to roll that out because you can actually sometimes raise your price and still be competitive and sometimes you got to lower it, and it gives you the ability to be dynamic throughout the day.

All right. Excellent. I think we covered North America or the U.S. and Europe, I think, quite well. Maybe we can just hit a couple of other quick updates, if there are any or comments to make on either the Middle East or APAC, both of those had strong transaction momentum. And then if there are any other dynamics to call out that investors should be mindful of, either regionally or any other trends we should be aware of?

Yes. So I'll go with APAC first on that comment. So in our APAC market, as I mentioned before, we have a new leader, digital first, came from a digital organization. And we're in the process right now of -- we've launched a receiver app within the Philippines a little over a year ago. Now we're in the process of putting a digital platform in there for sending as well.

The benefit here is you actually can send money straight to our own wallet, pull out of the process an agent and save on the commission business. We're also -- we've been talking about it for a while, but we're working on rolling out additional wallets. Right now, we're working on in Australia rolling out a wallet to that market. We got a license recently, and we'll be out in the market in the first half of next year.

So a lot of hot things going on in APAC, and the core business is doing pretty solid this quarter. When you think about the Middle East, it's got one of the most largest migrations in the world. Saudi Arabia has been strong last quarter. You're seeing some good business in the UAE. So it continues to be a place where you have a lot of ethnic diversity and a lot of movement, which is driving a good business there.

All right. Excellent. Why don't we move on and you alluded to this a little bit to the digital-first strategy. So when we think about branded digital, it's been demonstrating very strong growth momentum. You talked about 8 quarters of consecutive mid-single-digit plus revenue growth and healthy low double-digit transaction growth. So maybe just talk a little bit about that growth in light of the competitive environment and actually just talk a little bit about that landscape.

Yes. So Tim, as you probably remember, it's been a little over 3 years ago now. We had rolled out our new go-to-market strategy that was based in moving to market-based pricing. We rolled out a promotional pricing started in the U.S., but then went worldwide early 2023. That has largely gotten us to a large portion of our business is market-based pricing.

We've overhauled our marketing proposition. We continued to strengthen the retail to digital escalator. We've now gotten to around 15% of our overall new customers are coming from the retail base, which helps us keep our cost of acquisition down. We talked about our Investor Day that we're targeting sub-20%, which provides a very solid LTV to CAC.

As far as -- the market itself hasn't really changed much. You've got little small corridor players that become very competitive times. But when you look at the bigger, larger players, it's been relatively stable now for going on 1.5 years, 2 years.

Right. And when you say stable, that would include bidding for keywords and advertising dollars and all that type of customer acquisition cost effectively. No meaningful change.

Yes. No meaningful change.

All right. Great. All right. Let's stay on the digital topic just for a little bit. So there's a broader suite of services that can be characterized as digital. And maybe you could just expand a little bit more on Western Union's full-service digital platform.

Yes. So you probably -- you heard us at our Investor Day. We've now expanded from our branded digital business, which is cross-border remittances to also include stablecoin strategy. And our stablecoin strategy is really 4 or 5 pillars to it.

First off, we think there's a huge opportunity for us to pull out capital out of our business through leveraging digital currencies. As you know, we've got hundreds of millions of dollars trapped in our business every day to be able to enable real-time payments. We think to be able to move to a stablecoin would allow us to pull that money out and actually free it up to use for other purposes.

Also, it will help us move away from the correspondent bank system where you typically have money in process for a couple of days. We move on average about $500 million every day. So you can imagine what that would mean if we're able to move that and do that more real-time and not have it money tied up in the process and what I could earn on that.

Then you move into what we call the DAN network, the digital asset network. So we're -- we've now got partnerships with 4 different providers to be able to be an on-ramp, off-ramp with them. We expect to go live with them in the marketplace in the first half of next year. We're excited about this because it allows us to get more foot traffic into our agents, whether that be a big box store or whether that be a [indiscernible] or whether it be a check casher, they're all looking for more foot traffic, whether it be through commissions or whether it just be through buying more groceries if you're in the grocery store.

And for the customer, it will feel and look just like a Western Union remittance transaction today. You go into your yellow wallet, you send yourself a transaction and then you'd actually get your MTCN, you walk in and the payout happens to you and effectively provides the off-ramp or you can do the inverse effect of loading it on the on-ramp side.

Our third part of our strategy there is a stable card. So view this like an issuing card, but it would have a much stickier benefit in a country where there's high inflation. If you're -- I have a big workforce in Argentina. Can you imagine living in a country where last year, your inflation was 250%, 300%. We gave our employees 4 raises last year because if you didn't, they made -- they couldn't afford their bills.

So imagine a world where your family in the U.S. is sending you $500 home, but by the time you spend it in the next month, it's only worth $300. So we can see a good utility for our stable card there, which is an increment to our prepaid card we have today here in the U.S.

And then the last real element of this is we are issuing our own coin. The reason why we did that is we think that we've got good distribution to the 200 countries around the world we're in. But as you know, remittances are a large part of GDP for many countries we do operate in, and we're usually one of the largest providers. So we think that we can make a market for our coin in those markets. And we wanted to be able to control the economics, control the compliance and control the overall distribution, and we think we can grow that beyond that.

All right. Excellent. Let's move on to the next topic, which is account payout transactions. So they're growing fast, 30%-plus. Maybe you could just talk about -- I mean, sure, there's a -- that's a nice benefit to have anything growing 30%, but there's more to it than that in terms of the customer lifetime value and what this means for the stickiness of the customer.

Yes. So you're right. We've now been on 2-plus years of 30% account payout. This is whether it's digital initiated or retail initiated. They've both been around 30% for going on a couple of years now. People are moving more and more to wanting the money in their account in the receive countries. What we've seen is the stickiness of an account-to-account relationship is meaningfully higher on a retention basis because people have gone through the exercise of loading their account information on the send side, loading their account information on the receive side.

And it just provides -- as long as you're providing good service and you're providing a reasonable market-based rate, you're more likely to have a -- you're more likely to prevent someone from being a price shopper than a transaction where you're walking and handing cash and there's no long-term relationship or connection.

All right. Excellent. Maybe if you don't mind, could you just -- for the investors, could you talk a little bit about the unit economics of these and just talking about how the RPT might be a little bit lower, but the principal is higher and et cetera?

You've answered most of it there. But our average principal per transaction is somewhere in the mid-300s. We typically see an account payout transaction somewhere a couple of hundred dollars higher than that. To your point, the yields on this with the take rate is dramatically lower because you don't have all the same transaction or same cost to the transaction and the competition is different. But the overall revenue per transactions get much more similar and then your costs are similar. So our overall profit margin goes up, profit dollars a hair less, but you have longer retention.

All right. And lastly, on this topic, the 300-plus direct connections that you talked about to real-time basically payout with local rail connections, et cetera. Can you just talk about what that means in terms of a moat? How hard is that for others to attempt to replicate? How long does that take? What does that take in terms of banking relationships, licenses, et cetera?

Hard. But it's been a journey. So if you were to go pull us, many of our competitors, there's aggregators that can give you access to a fair bit of that. But what you don't get through the aggregators is necessarily all the notices and connections you would want if you're wanting to tell your customers, hey, your money is here in the process or here it's being delivered.

So we set out a journey about 2.5 years ago to go and take control of our payout network. What we've done is basically we had a benefit of having a couple of banking licenses. We have a banking license in Brazil. We've got one in Austria, it covers all of Europe, and then we've got licenses in lots of other places. That's allowed us to plug into things like PIX, allowed us to plug into things like UPI, SEPA and so forth.

Having the compliance infrastructure and then actually doing the technology work to plug into all that stuff is long and hard. Can you buy it, rent it, get parts of it? Yes. But I do think it's a massive moat for us. It gives us a benefit that we can leverage for both C2C transactions or potentially someday business transactions.

Excellent. All right. This next topic, you kind of hit on this or hinted at it earlier in your talk, but maybe you could just talk a little bit about consumer services and really not so much the growth today, but you've talked about sustained double-digit growth and getting that business to roughly a $1 billion type of business by 2028.

Yes. Certainly. So I did touch on a lot of that earlier. But it's a -- we talk about all the elements that were in it earlier. We've now had 3 years we've completed of double-digit growth. This year will be the fourth year of that. So we have a long track history of being able to sustainably grow this double digit.

The reason why I feel that's possible is because of the white space. When you've got a product where you're already everywhere, you're fighting for the next inch of market share. Here, we can go and pivot to different points of what new products do we put in place, how do we expand the products we have today, what additional relationships you can get to drive products for our customers?

And then the biggest asset we have is 100 million customers that we have that are eyeballs and wallets that are willing to buy services if we can provide them to them. So you've got everything from -- we've got lending partnerships to our media network, to helping them pay their bills, to travelers wanting to get foreign currency, whether it be inbound or outbound. So it's a super exciting space for me, as I talked about earlier.

Right. Excellent. Well, in the few minutes that we have left, I think a great place to maybe wrap things up would be to talk a little bit about the 3-year financial targets that you just gave at the Investor Day. So you did give a medium-term financial outlook covering revenue, segment growth expectations, earnings, free cash flow and a cost savings initiative. So maybe you could touch on some of the key aspects of the medium-term guide and included in that, maybe just include what portions or what assumption was made around Intermex?

Yes, certainly. So what we put out was overall revenue would grow 20%-plus over the next 3 years. That was driven by the Intermex acquisition, which for everybody is not counting, that's roughly $1 billion growth. Of that, $500 million to $600 million comes from the Intermex acquisition.

The next largest driver of this growth in our branded digital business, followed by consumer services, both of them contributing about $500 million each, offset by continued pressure in our retail business. When you think about it from an EPS standpoint, what we talked about was growing our EPS to be at $2.30, which is 30% growth over the last 3 years, driven by the revenue growth; the cost optimization, which I'll talk about in a minute; continued share buyback; and overall efficiencies.

And then the driver there on cost efficiency, we had done a program when we had our Investor Day 3 years ago, where we had set out to save $150 million over 5 years. We actually accomplished that in Q2 of this year, 2.5 years early. We set out a new goal at this Investor Day to save another $150 million. This one I highlighted in my prepared remarks at Investor Day was more of it will be falling to the bottom line this time than the last time we were building new products and we need the capital to do it.

This time, we still see meaningful opportunity to further accelerate this through, whether it be through AI technologies, whether it just be through end-to-end process improvements, we still see tremendous opportunity and a fair bit of that will fall to the bottom line.

All right. That's great context. As a minor follow-up, maybe you could just talk a little bit about across cash, the retail business, digital and then services, if you could give us any kind of sense around fixed versus variable costs across these components of the business?

When you think about our retail and our digital business, the vast majority of it is variable. So remittances, you've got your funds in costs, whether that be banking fees or interchange, funds out costs being commission expense or banking fees. So very, very large variable base moves with revenue.

On the consumer services side, it's a little more mixed. There is some fixed infrastructure on our travel money business. There's a little bit of fixed infrastructure on our media network. But there's also a large heavy variable costs when you think about retail money order or some of the bill pay.

All right. Excellent. Well, it's about the time that we have today. So I want to just say, again, thank you to both Matt and to Tom for joining us here in Arizona, and thanks again for being, for many years now, a big part of our conference.

Awesome. Thank you, Tim, for the time. Really appreciate it.

Okay. Welcome. We're excited to have Western Union here. My name is Bryan Keane. I head up the U.S. fintech practice on the research side here at Citi. And we're excited to have Devin here to talk through Western Union's new outlook, and they just had an Analyst Day, which we were just talking about. So there's a lot to talk about. But first off, Devin, thanks for coming.

Hey, it's a pleasure. Really excited to be here. We're excited about the story and the opportunity to talk about it.

Yes. Yes. No doubt, no doubt. So thinking about the Analyst Day, coming off its Beyond Analyst Day, I think you guys coined that phrase for the Analyst Day a few weeks ago.

We went from Evolve to Beyond.

Yes. I saw that, very tricky.

Yes. I'm a marketing guy.

Just thinking about the financial goals that you set 3 years ago in Evolve, as you mentioned. Can you talk about what went well first with Evolve? And where did you maybe fall short?

Yes. So I think the headline is we're largely where we expected to be when we laid out Evolve in 2022. The path there was a little different than we anticipated, and the current run rate is a little lower than we anticipated. And so in between that, a whole lot of things happened. We had a large business grow in Iraq and then go away. We had a couple of elections in South America and then here in the great United States of America that changed perspectives on immigration and migration. But we also had a European business that became much more resilient and in fact, has turned into a positive growth contributor far ahead of what we laid out or expected. And we've seen the digital business perform pretty much as expected.

So I would say the geopolitical movements, Iraq a plus, change in North American immigration policy a negative. But net-net, we're largely where we are. And in the third quarter, we were kind of flat on GAAP revenue, which is we originally said we would be 0 to plus 2. So that's a little bit on the low end of the 0 to plus 2. But for 3-year predictions in this business, given what I inherited, I feel like we do okay.

Yes. And how much of that being on the lower end maybe of the 0 to 2 is these kind of geopolitical economic factors that are a little bit outside your guys' control?

Almost entirely, right? And so we didn't expect to do as well what the retail turnaround as we're doing in Europe, but we certainly expect it to do better than we're doing in North America. And so you can just look at the bank to Mexico data, right? So the majority of my tenure as CEO, which is now approaching 4 years, Bank to Mexico principal month-over-month, quarter-over-quarter, high single digits, low double digits. We had a couple of quarters in the middle of the Biden administration that were mid- to high teens in terms of the amount of money going back to Mexico. Second quarter of this year was negative 12. So just the sheer magnitude of the reversal, it's just hard to overcome in any short period. No amount of improving the model, agent productivity improving our pricing position can offset the fact that there's just a lot less money flowing from the United States to Mexico, to Guatemala, Honduras, now -- for a while, it was Mexico, that was a problem. Now apparently, it's Venezuela. So we're blowing up boats and [indiscernible] from Venezuela. So that's -- we can. That is what it is, and we're working around it.

We had a lot of success with consumer services. That's probably better than we had laid out. In 2022, we called it the ecosystem, which was send, spend and save. And so really, we are focusing on the how do we add cards, how do we add wallets, how do we add bill pay products. And that part of the business, which we now call Consumer Services, has performed better than we had laid out.

Yes. Yes, no doubt. One of the things at the Analyst Day you pointed out was that you were now 70% market competitive with price changes that you made in geographies and corridors. I guess as an analyst, we always want to know then what the 30%, what's left to go?

Yes. So we have largely concluded that the 30% is what the 30% is. And so in some cases, we have a competitive advantage. We have a unique payout market in some place in Africa or we have a value proposition in terms of the nature of our go-to-market strategy for either that corridor or that demographic or that geography that either supports the pricing or it's just not big enough for us to actually try to -- the expense of trying to -- the medicine is worse than the cure or the cure is worse than the medicine. I don't know which one it is, but it's just not worth fixing. So we're largely done other than the normal day-to-day market fluctuations that we talked a lot in the Investor Day about how we're moving to a much more strategic pricing model where we are now changing prices sometimes as much as 3x a day on the retail side and even more than that on the digital side.

When we get an advantage for FX rates, we'll take that into the market with us in an afternoon, and we'll move volume in an afternoon because we have a better FX rate than people who bought all their FX the day before, which is many of the smaller competitors set their prices based on yesterday's FX rates because that's how they do it. At our scale and volume, we're in the market every day, all day for FX. And so if we get an advantage, we now have the ability since we're market competitive to turn that into the ability to drive volume. When you're 30% overpriced, a couple -- 10 basis points of FX doesn't make any difference. When you're at market prices, those 10 basis points of FX can make a difference.

So why doesn't price continue to drop? It sounds like you feel like pricing is now stable. But why -- in a digital world, I think the fear is with remittances that prices will continue to drop.

Yes. I don't actually know what drives that fear. You pay for everything. So if you walk out there on Park Avenue and you take $100 out of the ATM, they're going to charge your $3. I charge you $3 to send money to Mexico, right? Think about that, right? Like that requires no AML, that requires no sanction screening, that requires no KYC, okay? We have an amazing value proposition where you can move $200 to Mexico, Guatemala, let's pick some fun places. You want to send money to Afghanistan. You want to send money to Yemen or Syria? I'm your guy, right? For $4, you can send money some place, some place fun. So yes, I think somebody is still going to pay me to do that. I don't know anybody who's going to do that for free.

Yes, no doubt. There's nothing [ free ] for that.

Okay.

Well, essentially the KML stuff and all the legal ramifications of sending money.

This will be a stunning thing just to wrap your mind around. I have 3,000 people in compliance. 3,000 people in compliance to make sure because every KYC requirements are different by countries. Every country has their own set of sanctions, requirements and sanctions list. While anti-money laundering is pretty consistent, there are variants of around the world. And when a bank does these things for you, right, they do it for you for an account. So they now have KYC, you put your $10,000 in the account, they've created your profile. And then all they do is monitor whether you show up in a branch with $10,000 of cash. And then they're like, okay, well, that seems suspicious. We should go look at that. We do it on every transaction. Every transaction goes through that whole process for us. So I think somebody will pay something for that.

Yes, no doubt. On digital, can you just explain WU's digital strategy going forward in the underpenetrated corridors, country expansion, high-growth customer segments?

Yes. So let's break it into 3 real components, right? So we have our base business growing 12%. And we've laid out in Investor Day that we're going to accelerate that. You can do the math, but it's a couple of hundred basis points of acceleration. And then it's a closing of the gap between our revenue and our transactions, some of which will stop because of the abating of the price reduction that we've been doing. And so Matt laid out, we see that long-term kind of 300, 400 basis points difference between transactions and revenue, get transactions up into the mid-teens, 300, 400 basis points you get revenue up in the low double digits. So that's the theory of the case that we laid out. The drivers of that are continuing to optimize our very low customer cost of acquisition and leveraging our retail footprint. So we laid out at Investor Day that our goal is an under $20 CAC, which we think is industry-leading relative to what others do in the space. And so we'll go acquire a bunch of customers.

Part of the reason we bought Intermex is that gives us 6 million customers who we get to talk to every day, who currently when they migrate and go digital, they are doing that with somebody else, sometimes us, sometimes somebody else. None of them are going digital with Intermex because they don't -- they have a $10 million digital business, it's tiny. They don't have very good products, they don't have very good capabilities. So we're going to continue to feed that machine with our natural incumbency, which is our high-quality brand, our low CAC, our organic search results and feeding the retail to digital escalator.

The second thing we're going to focus on is we're adding a bunch of geographies. I was just talking to some folks here in the beginning, we're getting our outbound license in the Philippines. We're launching our outbound business in Indonesia. This year, we rolled out our next-generation platform in Argentina, Chile, Peru and Panama. We're going to put that also into Brazil. So the majority of our business, which I don't think people is really in the U.S. and Europe. We have a very interesting and high-growth digital business now emerging in the Middle East, and we're expanding our digital business aggressively into Asia and into South America. And so that's all additive growth that we don't have today.

And then the last thing, by dint of who we are and over time, there are some really important corridors that we are very insignificant in relative to our global size and scale. So if we take India, the largest inbound remittance market in the world by a factor of 2, globally, we have a 5% market share. It's gone completely digital. It's gone completely payout to account. Our historic focus on retail. One point in time, we had 100,000 retail payout locations in India. Think about that, 100,000 locations in one country. But that went very quickly with the change in monetary policy to everybody who has a bank account. Now we're something like 92% payout to account. But we didn't change our go-to-market. So big corridor growing rapidly, very low market share. We're going to go target things like that.

So how do we think about the ramping of the retail base on to digital?

So think about 2 things, right? One is most of my customers always begin their journey in sending money home in a retail environment. So when you first get to a country, you find a job, you put shelter over your head, food on the table, clothes on your back, transportation to work. Once you've established those basics of life, you accumulate enough money to start sending money home. At that point of your migration journey, you generally don't have a bank account. And so almost always, you start in the retail environment, and then as you progress in that journey, you become more established, you get a prepaid card, you get a bank account, you get a digital wallet, and you move into a digital sending experience. And we see it in our progression of our own customers. Our digital customers are younger. They're more affluent. But many of them did do their first remittance transaction in retail. And so we're going to capture that. So we're going to -- we're working on knowing when someone shows up for the first time, we've never seen them before. Is this person someone that's likely to rapidly progress to digital, and we're going to help them make that journey.

The second is there is a natural progression where people's happening in the U.S. a bit right now, where people wake up and say, I want something that's more convenient, I want something that's easier. In many cases, it's no longer cheaper, but in some cases, maybe cheaper. And how do we convince them to come with us instead of go with somebody else, right? And so the #1 obstacle we've gone and done consumer research amongst our retail customers who are going digital is they don't know we have a digital option. Oh, I didn't know Western Union had a digital option. That's number one. Number two is pricing. So our pricing is now competitive. But we historically were worried about channel conflict. We were historically worried about marketing to our own customers. So our competitors would market to our retail customers all day long and spend lots of money with the digital margin companies, the Facebooks, the Xs to target our retail customers because we were afraid to do it. We're going to change that. We're actually going to go after our own retail customers and help them migrate to digital with Western Union instead of with somebody else.

So how do we think about longer-term digital volume as a percentage of total principal?

Well, we laid out a chart at the Investor Day that said by 2028, 50% of the revenue of the company, which will probably be then 60%, 65% of the principal of the company, I'd have to do that math, will come from digital and consumer services. So our goal in the next 3 years -- and when I started 3 years ago, 70% of the revenue of the company was in the retail. And that 50% also includes our recent action of Intermex, which is an entirely a retail company. So we're going to add $500 million to $600 million of revenue in that number that is purely retail. So you can see what's going on in the, what I'll call the organic base, the growth of consumer services at 20-plus percent, the growth of digital with a low single-digit shrinking base in retail is rapidly transforming the revenue mix of the company.

Yes, I was going to ask about retail. Maybe you can size that for us today, how big retail is. And then we saw obviously, some amazing changes in Europe. And I think you guys highlighted growing 13% in Europe as of recent. Can you talk a little bit how big is the retail business? Can you keep it at low single-digit positive? And what happened in Europe that maybe you can emulate over in the U.S.?

Yes. So today, the retail business is about $2.5 billion. We laid out Investor Day ranges of kind of $2.2 billion to $2.3 billion or $2.1 billion, $2.4 billion. Tom will be able to tell you the exact range. But implying the aggregate retail business over the next 3 years will shrink low single digits. And so -- and that's truly a reflection of what we're seeing here in North America. We do not anticipate a significant change in the immigration policy stance. And therefore, we're just being realistic. To your point, there's only so much we can do about the fact that the flow of money into Mexico is now negative. And so that's the reality of that.

The European business is growing on the remittance side, mid-single digits. On the consumer services side, double digits. So all of European retail is growing low double digits, right? And so that's the evidence of the model, i.e., you have the right distribution, you have the right pricing and then you have the right go-to-market strategy. Retail can in a stable immigration policy environment, be a low single-digit grower given our scale, size and market share. And there are all the forces at work in Europe in terms of digitization. Europe is way more digital than the U.S. or Latin America or about the only place that as digital as Europe is probably Asia. And so all of the forces we talk about are at work today in Europe, and we're growing at mid-single digits.

Is there any learnings from Europe that can be crossed over to the U.S. for the retail business?

100%. And one of the reasons we had my 2 Italian colleagues on stage 2 weeks ago is we've actually imported one of them, max, who is Head of our European business to come and help us lead the North American business while we await the final regulatory approval for Intermex. The other reason we bought Intermex is the model that Intermex follows is very similar to the model that we're following in Europe in terms of the nature of the distribution triangle. We had a big gap on the independent nonexclusive in the U.S. because historically, the Western Union brand didn't compete in that part of the distribution.

We compete in that part with a brand we have called Vigo, which is much smaller. So when we add, which has about 6,000 independent agents. So when we add Intermex, we'll now have about 16,000 independent nonexclusive agents. So we fill that out. We're also adding at the top of the triangle, much like we've done in Europe with company-owned stores. So after the acquisition, we'll have about 200, 250 company-owned stores. And then we're going to keep the Western Union base with our big strategics, and we're making real progress there. I announced at Investor Day that Kroger has made the decision to go exclusive with Western Union. So they'll go from nonexclusive to an exclusive based on a lot of the investments that we've made in innovating on the retail platform, particularly with those large grocery category of retailers. So we think a lot of what's done in Europe can happen here, and we're working hard to replicate that model. Intermex really lets us accelerate that model at a much faster pace than we could do organically.

Yes, I want to touch on Intermex. I think you guys talked about $500 million to $600 million in revenue. I think it did maybe $658 million. So maybe some impact from overall immigration and what's going on in Mexico. But the business really -- the synergies could be huge just on the digital side. Maybe just talk about a little bit about the revenue profile, where it's going and why this is such a good asset for you guys to buy.

Yes. So you're good with math. I'll let that do it. You caught that little math there. So look, they just filed their queue. Anybody who looked at it, they shrank about 9% in the third quarter. So I would say we're being realistically conservative based on current outlooks and trends on what we saw at our Investor Day. So if I set that aside, we think there's a couple of really exciting things. So the majority of that $600 million of revenue is in 5 corridors, right, Mexico, Guatemala, the Dominican Republic, Honduras. They have no payout to the rest of the world. They don't do any business to Jamaica. They don't do any business in Philippines. They don't do any business to Africa. And there are neighborhoods, and they have 10,000 locations. So in every location, they sit side by side with other agents who are sending money to other parts of the world that they aren't using Intermex for.

So after we close, we're going to turn on Western Union's payout network in the rest of the world to those Intermex agents. And so if you go into some of the neighborhoods here in New York, you'll see very multicultural agents that have Intermex. The Intermex is only catering to the Mexican community or to the Dominican Republic community, and we're now going to allow that brand to cater to the world. So we think there's upside there. And again, that independent nonexclusive channel is a knife fight -- and the Intermex value proposition, which is high-quality agent service, high-quality customer service, that applies equally well to somebody who wants to send money to Jamaica as it does to Mexico. So we think the value proposition works. They just didn't have the payout network.

The second, as you mentioned, is the digital. One of the reasons the Board decided to sell the company is they couldn't see how they were going to invest hundreds of millions of dollars as a mid-cap, small sized public company to compete in the digital world. Digital has got -- there's only 2 or 3 now truly at-scale digital players, spending hundreds of millions of dollars of marketing, spending hundreds of millions of dollars on product. If you -- like in all digital businesses eventually, it becomes a scale game, and that is happening, and they just said, we don't think we can do that. The difference is we're already at scale. So we can take those 6 million customers. We can take that great Intermex brand, and we can just leverage our platforms. We can leverage everything that we're doing with very little incremental cost to allow them to have a high-quality, great Intermex digital to the world experience. So we see those 2 as real upside in that $600 million, which might be the conservative number based on current trends.

Yes. Yes. Can you talk a little bit about the Beyond strategy with the nonremittance revenues, I think revenue is -- [ lose ] nonremittance revenue share to 25%, I think, by 2028 from 15% today. I think that was from the Analyst Day. With the consumer segment reaching $1 billion in 2028. Can you talk through that business, the drivers there? I think it's always hard for everybody to memorize kind of what's in that business. It's bill payment, travel money, digital wallet, some of the prepaid side. Why has that business been successful, more -- maybe more than you and I thought it was going to be and what are the drivers for growth from here to get to those kind of penetration rates you talked about at the Analyst Day?

Yes. So let's break the business into 2 categories of products and services. There is what I would call the now at scale platforms, which would include our bill pay business, our retail money order business, which is largely a U.S. business, and our now travel money business. Those are $100 million-plus businesses, all growing strongly. We like those businesses. We've invested a lot in the platform. In travel money, we invested inorganically to get some of the platform like with the Eurochange acquisition. And we see market demand from our customers leveraging the channels that we already have.

So the beauty of Consumer Services, and this is the thing I didn't anticipate enough is we already have the customers. We already have access to the customers. There's market demand from our customers for these products and services because many of the people who serve my customers either have overpriced those products or don't have good products. And so we've seen customers excited about the fact that you can go to a Western Union and get travel money. We've been doing great business with our -- one of the reasons we're doing well with the strategic is our retail money platform reinvention. We reinvented the entire value proposition. We lowered all the fees. You can get a refund now by just scanning a QR code on the back of the money order, and they're walking into Western Union and getting any cash.

When we started this 3 years ago, if you wanted to refund, and I kid you not, you had to fill out a carbon copy form and send it to us via mail, we would process it. And 6 weeks later, we'd send you a check. Think about that. These people bought a retail money order because they don't have a bank account, and we would send them a check, right? Like that's not the greatest consumer value proposition. And so we've redone the technology, the front end. We've done the value proposition. And so we're seeing market gains. You put a good product out there that people want at a reasonable value.

The second category of products are things like our media network, our digital wallets, our card-issuing strategy. All the stuff we just talked about in our digital asset strategy, the digital asset network, the stable card. Those are more nascent. We've seen strong growth in them. We're still investing in those platforms. But that's where -- these businesses are going to continue to grow well. But the incremental growth is all coming from the next set of stuff that we're rolling out that we think is the same idea, which is a high-quality product with a good value proposition, serving our customers through our channels, which makes it then very cost effective to acquire those customers is what we laid out and why we think there's $0.5 billion of incremental revenue in that category of products and services. And to your point, it's a long list over the next 3 years.

Well, let's talk about the digital asset network, which I think is probably an underappreciated asset that you guys have. Stablecoin comes out or any new technology comes out and people will always point to the competitive threats what that means. Stablecoin, obviously, international people think about remittances. Well, they think about the risk there. But for you guys, you decided that you're going to launch your own stablecoin and you think it actually can be a positive. Can you just talk about competitively what stablecoin means and why can it actually be a positive for Western Union?

Yes. So we think it's an opportunity, not a threat. And we think there's 3 opportunities, right? So the first and the easiest is we're heavily reliant on the non-SWIFT -- SWIFT banking system. So we settle around the world in T+2, T+3 and in some cases, T+5 [ into places ]. So in order to have my value proposition, which is you can walk out of here and send money to Mexico and your loved one can pick it up 5 minutes later, we maintain a fair amount of capital in the system in prefunding and correspondent banking accounts to make that happen. The actual money that you sent won't go to Mexico for 2 more days, but your mom can take the money today. And so by moving to blockchain-enabled Summit platforms, we move money 24/7. No more weekend problems, no more holiday problems, and we think we can move those prefunding balances down significantly because of the rapidity of which we can move money around the world. So that's an easy opportunity. It's unique to people like us who have lots of negative float in the system to move money around. And so we think that's a home run.

The second, which you highlighted, which is the digital asset network, we spent a lot of the time in the Investor Day talking about our payments network they're building. Originally, our payments network was a cash out only network, and it was really built buy us for us. And so as we've modernized that and truly created an omnichannel payout network, so we have 3 billion-plus endpoints on accounts and wallets. We have 400,000 retail locations. We've opened up that architecture, so other people can plug into it. And we've been surprised at the demand that we've had from what I'll call, digital -- crypto digital wallet infrastructure players and others. That last mile problem is a real problem. So if you own bitcoin or you own USDC and you're in Bolivia and you want to buy a gallon of milk, you've got to go from USDC to Bolivars and you got to get those Bolivars so that you can go buy the gallon of milk. And so we solve that problem every day and how our system works. We can put that money in your bank account, we can give you that money cash. We run treasury operations in all these places where if somebody sends money, we collect the Bolivar. If somebody pays money, we hand them back to Bolivar. And so there's been a lot of demand to let other people who are in the digital asset world access to that funds out network, that off-ramp. And so that's the digital asset network. We'll also do in-ramps. There's been less demand for on-ramps than there has been for off-ramp. But we think eventually there'll be demand on both on-ramps and off-ramps.

And then the third is our own coin, USDPT. I try to say that fast 3x. The U.S. dollar payment token, and we purposely chose not to call it the Western Union payment token because we actually think it's going to play an important role in moving money, particularly for consumers around the world in the stablecoin digital asset. We also think it's a unique value proposition for our consumers. So today, the way the system works is if you send money in Mexico, you walk into an agent or you go online, we tell you what the exchange rate is, you agree. And then your loved one on the other side has no choice but to accept Mexican pesos at the exchange rate that the tender agreed to. It's how it works for everybody, not just Western Union. By putting that into a digital asset, you'll send your money to your loved one. And then your loved one basically now holds that money. They hold that store of value, they hold it in the great U.S. dollar, which in many cases around the world, is a far more stable currency than the local currency. And then they have control, the receiver has control about when and how they convert that to local currency. And so we're going to shift that decision right from the sender to the receiver.

In the process, we think that receivers may not decide that they want to convert every dollar instantaneously local currency, given the stability and the security of the American dollar that they'll hold it, and we will turn a negative float business into a positive float business. So anything that sits in that USDPT, we get their treasury rates on until it's redeemed.

Also, as we announced at Investor Day, we're going to link that to a stable coin card. So we're going to issue in partnership with Visa and Rain. We're going to issue cards against those stablecoin balances. So you can then actually hold your stablecoin balance, and you can get a card and then you can actually go shopping, just like I told you, you want to buy that gallon of milk in Bolivia, you just swipe your card, and it comes out of your stablecoin balance, you don't have to worry about the conversion, you don't have to do anything. So we then basically allow it to be a digitized bank account for people who don't have bank accounts with card access. And so where we've tested that idea, consumers find it very compelling. We haven't -- we don't have any market yet. We'll get it into market early next year, but we think there'll be market demand for it.

I know we only have a couple of minutes, but the revenue model will be the float, the balances that -- or people using card transactions...

Interchange.

Yes, the interchange, then on and off-ramps as well. Anything else to think about when we think about the digital asset network for stablecoins?

Yes. So for the digital asset network, well, the first is eliminating float for Western Union Treasury taking dollars off the balance sheet. Second, being the off-ramp, people will pay us very attractive rates to provide that local market liquidity as an off-ramp. And then for the consumer value proposition of USDPT, it's float on balances that don't immediately convert. We do earn when they convert, we'll earn the FX that we would normally, so there's an FX revenue stream on that. And then if they choose to use a card, we will have fees on the card and interchange on the card as well.

Okay. And then finally, I just want to end with the outlook. I think Western Union is assuming global remittance market grows in line to 3% to 4% kind of your expectations what are the key upside and downside scenarios for you guys to achieve that revenue guidance of $4.8 billion to $5.3 billion by 2028 and $2.30 in EPS. What are some of the -- what gets you to the upside of the range and what could be some of the risks?

Yes. So one of the things I've come to learn that this is a very volatile business. Somebody decides to invade a country that disrupts my business in some way and somebody gets elected that disrupts my business in some way. Somebody does lots of geopolitical effects. Now the good news is we're very global. So if you have a war in one part of the world, sometimes the rest of the world is doing pretty much okay. And so our global diversity helps with the geopolitical and the macro gives and takes, which is why we think on -- and if you go back for a long period of time, in aggregate remittances, are basically a global GDP plus 100 to 200 basis points, right? So the migration of people around the world is part of what powers GDP. And so most high productivity countries bring people from low productivity countries in to sustain their economic growth. So as long as you think global GDP will stay in that 2% to 3%, global remittances will be in that 3% to 4%.

The upside for us comes in great execution on things like the digital asset network. It comes from a change potentially in economic policy or immigration policy in North America. It comes from an acceleration in our digital business because there's more take-up in that geographic expansion that we're doing or in the corridors we're focusing on. That's where the upside comes.

All right. With that, we'll keep it there. Thank you very much, Devin.

All right. Bryan, it's pleasure. Thank you very much.

All right. So we're live. Excellent. We are having a nice conversation. But anyway, thanks for everyone for tuning in. This is Tien-Tsin Huang. I'm the payments analyst at JPMorgan. Really excited to have Western Union back with us. Devin McGranahan, CEO, is kind enough to join us for a fireside chat. And coming off of the Investor Day, I know there's a lot to talk about, but thank you for being here, Devin.

It's our pleasure. It's always great to come and I love the perspective you have of time and distance on our company. So I enjoy these very much. Thanks for having us.

Of course, and always a special place in my heart. I always say it out loud, right, Western Union one of the first names I followed when I first started and whether it was through First Data and in the old days. And I have framed somewhere, my Western Union initiation report.

So I have to show it to you one day and get you to sign it. So before we get started into the strategy, I thought we built into what you talked about in Investor Day since that is very, very fresh. But before we do that, just -- we've been asking everyone this, just give us a state of the macro and the help of customers as you see it? I mean you're in so many parts of the world. Have you seen anything that's caught your attention change wise?.

I'd highlight 2 things, right? One, the U.S. consumer, particularly our consumer, which is what I'll call mass market or down market, a consumer is under directs right? And you can see it whether you look at Chipotle's numbers or McDonald's numbers, you can see that there's a two gear economy happening in the U.S. You can see it in the big banks versus the small banks. And so we're seeing it, right? We're seeing in the North American market, both the effects of the changes to immigration policy and our customer feeling the financial uncertainty and stress of the current economy.

And so as you saw in the third quarter, the North American results continue to be pressured by that transactions down. But surprisingly, principal per transaction up, right? And so that means people are sending less frequently, but slightly more amounts like up 9% or something. But outside of the U.S., we actually see a pretty resilient economy around the world.

We see some strength in the Middle East continuing particularly in Saudi Arabia in digital and the rapid digitization there. We see reasonable progress in Asia. And so the macro really are in North and South America and in particular, in North America.

How about on the regulatory side? I mean you mentioned it briefly, but anything that you're paying close attention to? I know we had the Iraq issue last year. That sounds like it's behind us. I don't know if there could be something like that, that resurfaces. I know Mexico, there was some action going on there with a few agents. Anything to update there or watch.

So for us, the biggest change in the regulatory environment is the pending remittance tax. And so we are, I think, successfully implemented all of the technology, not just across our own agents, but across all our partners, remembering that a big chunk of our business in North America, we do through Kroger and Walmart and Albertsons.

And so we have to ensure that they understand what has to happen in their front ends to make sure that we comply with remittance tax. So -- that's the biggest one. It feels like the pressure from Washington has shifted to other areas of focus now that the Big Beautiful Bill has worked its way through Congress. So I would say it's kind of as is status for us on the regulatory front.

So from a tech and compliance readiness you're there with the remittance tax.

Yes.

You did before we get in some of this up, you mentioned Kroger, so I'll ask. You just did renew Kroger an important name in the past as a -- as an Asian partner. What went into that? Why is this one perhaps different? I know point-of-sale technology and all these things are being evaluated compliance, everything else as well as price, but what anything to learn or share from that renewal?

So we started the process with Kroger probably two years ago. And so we started the dialogue with them about how was retail evolving for them? And how could we partner with them in new and interesting ways as they change their retail experience. So the very traditional retail experience of Western Union behind a service desk where you sell cigarettes, lottery tickets, gift cards is evolving.

It's evolving across the industry. And so -- we sat down with them and mapped out a road map about how would we do remittances in lane. How would we adopt more self-service or kiosk like they've done in the in the grocery side. We've talked to them about how would we do better linkages with the loyalty programs and how would we integrate The Western Union and the remittance experience into the overall shopping experience that they're trying to drive across their brands. And so we worked on that together with them for two years.

They're also going through a relatively significant upgrade to their retail point-of-sale system. And so we partnered with that with our next-generation partner platform that we call partner OS. And when we got to the renewal, they were like, well, it certainly would make sense to continue on this journey and having multiple remittance companies makes that more complicated and you guys have showed how much you're willing to invest and innovate, we're going to kind of single source it with you guys?

Good.

And so we were very pleased by that decision on their part. And I think it reflects on the journey we've been on the last 3 years and the investments that we've made to really innovate in that retail environment with someone who's a strong a retailer as Kroger.

Right. So do you think that, that's a something that can be replicated now that we're seeing more modernization of the point-of-sale and retailers are looking to expand and be smarter with their vendor decisions? I mean what -- is that repeatable? That's another way to ask it.

So I think it's -- if I can reframe that just a little bit. So I think there's a narrative in the industry that customers have a preference for the nonexclusive independent agent channel. And certainly, there have been some smaller players -- including one we just purchased. That have had success in the independent nonexclusive channel. I actually think -- and this is part and parcel to a proof point to it, that the original value proposition, which is you're buying groceries, while you're there, do you want to send or receive money?

The convenience, the safety and the availability of being able to conduct Western Union in a high-quality safe, well-let retail environment is durable. What happened is the experience degradated, particularly during COVID, where there was no staffing in the service desk, so you couldn't find someone to send money. And then as we talked about at the Investor Day, it was one of the places where we had significantly raised prices.

So even if it was a valuable convenience you could walk outside down the street and get 30% less for the same product or service. So why was this channel then viable if you had service delivery problems and a value proposition that had a 30% premium on the pricing. So by fixing both of those problems, innovating around the retail experience and getting to market competitive pricing, we actually think it's a great value proposition and are seeing that in that large base, which is unique to Western Union. We have all the major retailers, Publix, Kroger, Walmart, Albertsons, Walgreens. That's a differentiator and a part of our retail reinvention.

So before we dig further into retail, you mentioned the pricing. And so as long as I've covered Western Union, the idea was the global brand, the trust, you pay a premium for the price. You came in -- I think in the third quarter of '22, I think, is when you started the the shift to more market-based pricing. I had written down from the Investor Day, $450 million of pricing actions that you've taken. That's a lot, Devin notionally. And so it sounds like you're mostly done at this point from a pricing perspective. Is that true? And is that going to change the narrative of Western Union and this infatuation investors have with pricing?

So it's a great question. And other than self-justification, there is no market-based evidence given our growth rates relative to competitors or to the industry that somehow premium pricing allowed us to grow, right? Like there was no -- and I know we said it a lot, but I know people would write it, but I never found any evidence that said somehow we have something that enables us to grow the business at a premium price.

What we have found is by becoming market pricing, that value proposition of our great trusted brand, our high-quality compliance, our great distribution on both the send and the [ side ] with a market-competitive price actually positions us to grow. Not just in some corridors, not just keep up with the market, which we weren't doing. And I think you have heard me on stage a couple of times when I first started, refer to ourselves as the industry's largest share donor right?

And we watched quietly as many people took important market positions away from us because of our market positioning. And so we think it actually changes the narrative to say, not only can we maintain market levels of growth, we actually think we can start to become a share acquirer versus a share donor. And there's -- and we talked in the Investor Day, there's a number of important markets, U.S. to Guatemala, U.S. to India, France to Morocco, where we see as a case in point. U.S. to India, we have a 5% market share, right?

Largely a market as it went payout to account, we still had pricing that looked like payout to retail. We think that's a big opportunity for us. And so we think it should change the narrative to say, okay, now you've got a viable market competitor with a differentiated value proposition that can grow.

So competitively, if you're at market-based pricing, and we'll talk about Beyond and selling beyond that for a moment. But if we just focus on remittance is then defined like what's Western Union's right to win versus the traditional money transfer players, the digital ones, the tangential ones we call them, which would include network-based or fintechs or wallets or some of the modern players even around crypto. So how do you assess the landscape there, given that you are now more competitive on the pricing side?

So I would break it into two buckets, right? The first is our 175-year history as Western Union is just fundamentally a differentiating asset in terms of what is our CAC for acquiring a customer digitally, what happens when people are on the street, and they say, I need to send money someplace. We are top of mind in the category unaided.

And so any business that's competing to acquire customers every day, that is hard for anybody else to easily replicate. And now that we are starting to gain a reputation for being -- it was always yes, Western Union, but expensive. If it's now and Western Union, convenient, fast and reasonably priced. No one goes to the second consideration. Now it's, well, why don't I just use Western Union.

So the quality of the history of the brand around trust, around reliability and now around and accessibility and now around fair value is a competitive advantage. The second is in digital, I think it's Remitly and then us. We have $1 billion digital business. In retail, it's us and then probably Ria, Euronet and then maybe MoneyGram and then everybody else gets much smaller.

So we can invest at scale at a level that fundamentally other people can't, whether that's in technology, whether that's in negotiating payout arrangements, whether that's building our own, as you heard in the Investor Day, payments network, where we're connecting directly into the banking systems, the real-time payment systems in 10 countries around the world, right?

You can't do that at scale at a smaller company. You rely on payment aggregators, you rely on the tunes of the world or the TerraPay of the world. Remitly, doesn't even own their own payout network. They rely on Ria, so they have an economic challenge and they have to pay Ria arrears, pay the agents. And so our scale is the second real differentiator and competitive asset that historically we probably didn't take enough advantage of because, again, if you're overpriced, making a small difference because of we have a better payout cost or you can average your technology didn't trickle into anything. But when you're market competitive, those scale advantages can come through, both in terms of margin and in terms of our ability to compete.

Yes. At the Investor Day, I noted one thing that you said I thought was important and subtle to me, but you said that you were proud of the strides that you've made in improving the tech. And -- it's a business that's been around for a very long time. So is that -- how important is that for what you need to be more competitive, whether it be with agents or consumers or outreach or the digital experience, that kind of thing? Is it in a good place to be competitive in your eyes?

Yes. And so we are a tech company. We're a payments company. I think we lost sight of that. But we've got 4,000 or 5,000 people in tech, and so for us, this is the competitive asset. Our ability to build, deliver high-quality, technology-enabled solutions at scale around the world, not just in one country, not in three countries. 50, 60, 70, 100 countries, right?

And that gives us market access in places that other people can't easily get to, but also allows us to create those experiences and invest in that tech at a level that other people can't. And so at Investor Day, we showed our point-of-sale system and some of our digital wallet and our next-generation platforms. We've been working on those for two or three years, right? Those are the fruition of this at scale investing with purpose that we've been doing.

And we think over time, it is the new moat for a long time, the moat Western Union had was just a better payout network. We had more agents in Africa, more agents in Mexico or more agents in the Philippines. And when in that is the retail value proposition, that was our moat. Now the moat is we have more scale to manage those networks, to build a better path to account network and to invest in the tech. And that's what will differentiate us over time.

So thinking about that investment in tech. I know that digital over the years has marched higher in terms of growth. But the initial pain was there was trouble in accessing different forms of payment and managing the risk and the fraud and the onboarding and on all of those things. So I know you've said some goals adding $500 million in incremental digital revenue by '28. Versus three years ago, are you from a tech standpoint? I think you kind of answered it, but are you on par now in your ability to go aftermarket and have an experience in fraud rates and auth rates similar to those that are digital native.

Yes. So we have the platform that is on par. It's just take a country like Chile, for example, right? Two years ago, we couldn't take a card payment in Chile. So the only digital experience you could have was an off-line bank-funded transaction. So you had to go to your bank, push the money to Western Union and then we would send it some place in the world. Not a digital first, not a Plaid-like experience for bank account or more simply just card acceptance, take a debit card.

And so we've been working -- so today, if you go to Chile, we have the full payment experience. We do direct funding from bank accounts. We take debit cards, we even take credit cards. So someone like Wise wouldn't take credit cards. And so we've been building that platform. Now -- and we talked about our new Beyond digital platform that's live in Canada.

The opportunity for us is the acceleration of the rollout of the platform to the world. So here in the U.S., we are still on our platform that was here when I got here. So we're on the generation of platform from, call it, 2020, 2021 because we weren't willing to innovate and risk the $600 million digital business in the U.S. And so we've got plans for next year to move the U.S. to our next-generation Beyond platform, which we've been working on for two or three years and feel it is in everything when I said we're becoming a digital-first company, that platform manifests being a digital-first company.

Okay. I know we're skipping around Wise. But thinking about the platform and the payouts and use that Chile example. So I thought the next-gen payment network discussion at the Investor Day was really good in the sense that everyone is talking about pay-ins and payouts and real-time payments, and you have so many nodes across the network and the trust side of it, right? Devin -- and so how differentiated is that network versus some of these other payout networks, and I'm sure investors have studied all of them, but it feels like it's a little bit of a sleeping giant in the sense that there's a lot of potential to expose that and you called it open up the network.

I know we're skipping around, I apologize, but running out of time, I just want to make sure I hit it. But what's sort of your vision? I'll leave into the stable coming question. But so we don't have to skip that. We can maybe save that for the next one. But how do you see that piece of just the big payout network as you built it and where you can take it? .

Yes. So remember, I said our traditional moat was our cash retail payout network right? And it took years and years to build that, signed and manage all the agents around the world. That's only one component of what our new capability, which will be as a fully enabled funds in, funds out, retail, digital, all payment types, including digital assets network. .

And I think that is the big differentiator, which is most networks that people build because of who they are, are one-sided through. So you focus on sending money someplace or you focus on accepting money someplace. So merchant acquirers focus on accepting money, pay out companies or networks focus on sending money, right? And so the only people who truly are 2-sided are the networks like Visa and Mastercard, but they're really enablers for people like us or other people because they're the infrastructure providers.

There's a few people like us who are mastering both the funds and the funds out as proprietary platforms and networks, so you get the entirety end to end. And we're doing the hard work of then integrating that into modern payment platforms around the world.

So we're integrated into [ PIC ]. We own a bank in Europe. We just did a big platform upgrade. We're fully integrated in real time into SEPA. So I can move money around Europe in real time, cost free, right? And so we think that is a differentiator. It's going to differentiate us for our business. So it lowers cost, increases real time, increases quality.

But we've now built it with a much more open architecture. So historically, the stuff we built was for us, by us and only us. And so it had much more, what I would call, closed architectures, not exposable API layer. And so the way we've built this is and this is when we get to what we just launched in the digital asset network, we can expose it to partners.

And we can have partners have a single point of integration into our network and use what part of it that makes sense for them, right? And so we announced 4 partners that will have live in the first quarter of next year. So that speaks to the speed at which we can bring a third party's payment volume now into our network.

Now those are mostly going to be funds out, although we've offered them funds in capabilities, so that people can convert digital assets around the world into currency, either via account or via cash and so that's the idea. The idea is to have this at scale, funds in, funds out network, not in 10 countries, but in 100 countries.

And then if you are someone who needs access to some or all part of that, we will enable it, right? We probably won't enable competitor remittance companies like some of my other competitors have done. But there's lots of use cases as B2C, C2C, B2B, B2C payment cases where people need to move money across borders, that you can use our platform and rails for.

Yes, whether it's, like you said, a social network or a consumer network or marketplaces, you're in some of these difficult-to-reach countries. You're in KYC on the user side. I mean I think there's a lot of potential there. But just -- I know investors wanted me to ask you this, and then we can open it up to questions. So your vision then on the US DPT and then the stable card, I know you're working with Solana and whatnot, but how do you see that evolving? And I know I asked you on the stage, the guardrail question around how you plan to manage that. But how do you see that evolving short, mid, long term?

Yes. So there's really three very distinct opportunities there that we're pursuing, right? The first is we are beholding to the Swift banking rails, the interconnected correspondent banking system. So while our customers, and I think most people understand it, while our customers can send money in real time, the actual movement of the money, T+2, T+3, some places, it's T+5, right? And so Matt and I then have to maintain float in our -- of course, we have to maintain pre-funding accounts and corresponding banks around the world to enable our customers to experience real time, because the payments network doesn't actually make that happen. And so we're solving part of that problem by interconnecting to these real-time payment rails. .

But digital assets at scale, settling with our partners in real time, 24/7. We never have to worry about holidays. We never have to worry about weekends. We don't have to worry about the T+2 or T+3, so as a platform for our own treasury operations, it could be a game changer and it could free up meaningful amounts of capital that currently today is consumed by enabling our business model.

The second, which is our digital asset network, which we were just talking about, which is opening up that last mile, which when you talk to a lot of these digital asset companies, that's the hardest thing to solve is the last mile access is if you're in Bolivia and you have USDC, and you actually want to buy a Coca-Cola, you got to convert it into bolivars, right?

And so how do they get at scale. Last mile connectivity to do that digital asset to [ Fiat ] conversion for a customer. So the off-ramp, right? And so by creating the digital asset network where, in essence, opening up that capability, our local treasury operations, our ability to source currencies in these local markets, which we do as a normal part of our business anyways, because we're doing payouts in these markets. Today Bolivia and you think about all the harder places, right? And we've seen a lot of market demand for that.

People are like, wow, you could do this. You could do this with one API. You could do this across all these end markets. We're like, yes, we can. So that's the second opportunity. And then third opportunity really is around US DPT, which is our own coin. And that has two axes. One is in the first opportunity, using it to do our own treasury operations and potentially treasury operations for others, turns what today is negative float business into a positive float business for us.

And then the second is that the consumer value proposition. So today, the way the system works is if I send you money, you have no choice in most markets unless there are no currency market, but there aren't very many of those. To accept the current exchange rate and the local currency. That's the way the banking system works. That's the way the countries work. With US DPT, we can give customers the option to hold U.S. dollars until they want to do the currency conversion until they want the local currency. So it in essence, becomes a digital savings account that they can hold on to in their Western Union app and they can decide when do I want to convert to Mexican pesos.

And then with the stable card, we're actually giving them a payment mechanism where if they don't even want to convert it to cash, they just want to go to the grocery store or they just want to go to McDonald's. They just swipe the card and the conversion happens for them. They keep the stable asset, they can have local purchasing power with the card.

So we think it changes the end consumer, and you saw in the Investor Day, we talked more about our receivers and the 70 million people around the world that we have the privilege of serving. This is a value proposition for people who receive money for Western Union to maintain the value of that money in U.S. dollars until they we give control to the receiver until they want to convert it into local currency.

Perfect. Two minutes left. .

Two minutes left. .

I hit like 1/3 of my questions, but I got to give one chance to ask questions for folks. Anybody. Happy to take a question if that's okay then. Anyone, no, I can close it out. So maybe to to add or to close on what you just said, the opportunity to bank the users, including the receive side has always been something we talked about with Western Union and some neo banks have come public.

There's probably going to be some more that come public. But why can't Western Union Bank for users? You have to trust they're giving you the money on the inflow side that they've earned to send money back home. It's going -- you're seeing it on the receive side, why can't you extend that more into financial services. I know it's part of Beyond -- but why isn't that the top priority for Western Union?

So I will start by saying we are, and we've launched our digital wall or our digital bank in 6 or 7 countries. And so that is the Beyond strategy to go and provide consumer services, bank-like products around the world. The process of doing that, in many cases, requires licensing. .

Remember, most of our received countries, we didn't have what I would call payment institution bank-like level licensing, because we relied on local agents. Many of our agents in many of our markets are banks themselves. So Elektro is a bank or a bank [indiscernible] is a bank. And so we relied on them and their licensing in those markets. So we're going around and either buying or applying for and getting licenses to put us in a position to do that in many markets.

The second is you actually, in those markets have to go and acquire the customer through an onboarding in a KYC process according to the local market, and we're going to go and do that as well. But this stable coin card idea, circumvents a whole bunch of that. So we can send you money and you can just hold the stable coin in your app as a value to then choose how you use. You don't actually need to go through a KYC process. You don't have to open a bank account.

You can just hold U.S. dollar-denominated assets via the stable coin without having to go through the process of becoming a bank customer. And then when we issue you the card, now you have, in essence, a virtual bank account that you can fund via your remittances and you can use in the local market with a card or you can pay add to cash in any one of Western Union's 400,000 retail locations. So we think it really accelerates that strategy in a way that is much lower left, much less capital intensive, much less regulatorily intensive. And so we're excited about it.

Yes. No, it's fun. There's a lot going on. I wish we had more time to talk about. Any closing statement you want to make here, Devin, before we let you go?

Thank you for listening. Thank you for being a partner over time, providing great feedback. And -- we look forward to continuing to tell the story, and we think the results will start to show up?

Yes. No. I think like I said, I thought the Investor Day was great. You guys put a lot of thought into that, and it's going to be fun to track the performance. And I'm sure the execution will be sharp. And like I said, it would be fun to evaluate it. But thank you for the time, Devin. It was always a pleasure. .

Thank you.

Good afternoon. My name is Tom Hadley, Vice President, Corporate Development and Investor Relations. I'd like to welcome you to Western Union's 2025 Investor Day. For those of you who are with us in person, it is so great to see you. And for those of you who are joining via webcast, thank you for joining. Over the next few hours, you will hear from members of the management team providing insight into our Beyond Strategy, and then we will take your questions.

The itinerary for today will look like this. First, Devin will take the stage and talk to you about where we have come from, where we are going and where we see the future of Western Union. Next, Bob Rupczynski, our Chief Marketing Officer and Head of our Digital, will join us to discuss the power of our brands, our digital journey and what it means to be a digital-first company.

Following Bob and making a quick trip across the pond all the way from Rome, we will be joined by Giovanni Angelini and Massimiliano Alvisini. They will discuss the success they've had in Europe with our retail strategy and how our retail business provides the foundation for success. After Max and Giovanni, Sofia Graniello, SVP, U.S. Consumer Services, will talk to you about our plan to go beyond remittances and where we see our Consumer Service segment evolving over the next several years.

Then Ben Hawksworth, our Chief Operating Officer, will discuss the value of our network and how we plan to continue to innovate with next-generation payment solutions. And lastly, Matt Cagwin, our Chief Financial Officer, will talk to you about what this all means from a financial perspective and what we believe we can accomplish over the medium term.

Before we kick things off, I'd like to ask everyone please silence their phones and computers. You have the team who will execute this strategy on the screens behind me as well as in the room in front of me. These screens will also be used to project our presentation. But if you prefer to follow along on your own devices, you can find the presentation on westernunion.com under the Investor Relations tab, and they will remain available after the meeting.

Lastly, before we get started, refer to the safe harbor statement you see on the screen. Today's meeting is being recorded, and our comments include forward-looking statements. You all know predicting the future is hard. So please refer to the cautionary language in the presentation and Western Union's filings with the Securities and Exchange Commission, including the 2024 Form 10-K for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements.

And we will now begin our presentation with a short video. Thank you.

[Presentation]

Good afternoon. My name is Devin McGranahan, and I have the privilege of being the CEO of this wonderful 175-year-old company. It has been just over 3 years since I stood before you last as a new CEO, and a lot has happened in those 3 years. The path that we have taken has zigged and zagged, but we arrive here today at a position that is largely consistent with what we told you to expect 3 years ago. Matt will have more to say about that later in the presentation.

We are a company that has a strong history of reinvention, having invented the telegraph, been an innovator in cellular and satellite communications. We invented the first credit card and now have been a leader in cross-border money movement for the past 40-plus years. We began another journey of reinvention 3 years ago, and I believe we've made significant and meaningful progress. We've been stabilizing the core of our business and laying the foundation for our next chapter, Beyond. What do we mean by Beyond? Most notably, what we mean is Beyond what we are best known for today, which is retail, cash to cash consumer remittances.

But more importantly, Beyond, what people have come to expect from Western Union, Beyond what our customers expect, what our agents expect and maybe most important for this room, what our owners expect. We are positioned today to go beyond. Over the past 3 years, we have been working towards being and building the foundation to be a digital-first company, enabled by our retail foundation, serving customers beyond remittance, powered by our market-leading payments platform. This is the future of Western Union, and this is Beyond.

Today, you will hear about how our large at-scale and diversified business across geographies, channels and products is positioned to weather the current historic and ongoing disruptions that are occurring in remittances and yet still power us forward to stronger top and bottom line growth over the next 3 years, an accelerating digital channel, a proven platform and model for retail, a rapidly expanding suite of consumer services products and our recent move into digital assets are the factors that are expected to be the drivers for our future growth.

An important difference from where we were 3 years ago is the fact that we believe we are now market competitive in over 70% of our geographies in corridors around the world in both retail and digital. Three years ago, when I stood before you, we were consistently a couple of hundred basis points above the market in our pricing in important corridors, many in our digital business with no real discernible rationale other than our history of having a strong payout network. As that competitive advantage diminished, we were slow to adjust. As a result, in what is, frankly, a very highly competitive market, it was virtually impossible for us to deliver even market levels of growth.

The effort and cost to reposition ourselves has been significant and a meaningful drag over the last 3 years on our top and bottom line. We believe that we managed it well with our cost redeployment program and by driving acceleration and growth in transactions. We delivered stable adjusted earnings per share over the last 3 years while achieving market competitiveness. More importantly, we believe that we are now well positioned to begin to really start to grow share and drive the top line revenue growth numbers.

By delivering a product that is fast, easy and well priced under our iconic brand, we have much broader market appeal than we have historically had and believe this is critical to being able for us to grow in competitive and large corridors like U.S. to India or Europe to the Dominican Republic. Bob will talk about the potential we see in markets and corridors where we feel we have underperformed against our potential. This change in pricing strategy, however, is core to a larger change at the company.

We have become a company that is maniacally focused on the customer, creating products and experiences that the customers need, see value in and are delighted by. As we focused on becoming market competitive, we also began what it -- to look at what it meant to be market competitive or better on many other dimensions as well. We've invested significantly in accelerating transaction times, expanding our payout-to-account network with many new direct connections, improving our compliance and risk decisioning and reducing service friction so that we can delight the customer along every step of the journey with us. We are building a culture that puts the customer at the center of all of our thinking and our decision-making.

Digital First. Can a 175-year-old company really be digital first? I'm here to tell you without a doubt. Over the past 3 years, we have invested in our platforms, our omnichannel experiences and our go-to-market model to make it possible that we are as digital as can be in everything that we do. Our digital-first strategy is simple, make it as easy as possible for people all over the world to transition to a digital experience for any part of or if they want, all of their remittance journey.

Our trusted brand, our geographic reach and our next-generation platforms, which hopefully you got a chance to see out in the lobby enable this strategy, whether you want to pay with a QR code in one of our own stores in Singapore, send money to your mom's Nikki wallet in Nicaragua, request money from a loved one from within our receiver app in the Philippines, redirect an inbound remittance to your Western Union wallet in Brazil or simply send money online from the U.S. Our digital-first platforms make it possible to do that across channels and across geographies.

We are working toward a truly global omnichannel 2-sided financial services network. Our global platform of digital wallet integrated across our entire network will enable onboarding, payouts, digital asset off-ramps and importantly, nonremittance financial services. This is what we mean powered by retail.

When I stood before you a few years ago, we talked about reinvigorating our retail business. We talked about creating a stable base that can drive new customer acquisition and power our other channels and businesses. We are making progress. Over the past 3 years, we have made notable improvements to our technology, our go-to-market position and our operating model. Three years ago, we had a relatively large and somewhat unproductive network. We had a poor point-of-sale experience and an agent support model that prioritized cost over experience. Our point of sale at the time, as an example, treated every transaction like a new customer, took over 7 minutes to complete a transaction and produced beautiful 54-inch receipts yet somehow couldn't accept a card-based payment.

Today, we have a global cloud-based platform that makes it easier for customers and agents to choose and use Western Union everywhere in the world. If you've not done so already, stop by and see Uri out in the lobby and see why these new capabilities can, in fact, and will be a competitive advantage for us going forward and a foundation platform on turning our retail channel into a digital-first capability.

As I discussed at the beginning, the investments we made to become market competitive were not just about cutting prices. We aspire to be market competitive every day everywhere that's important. We have implemented an entirely new go-to-market model that includes a new strategic pricing platform that monitors pricing on a daily and in some cases, even hourly basis. Daily or even intradaily adjustments now enable us to remain competitive and profitable when we conduct transactions.

It is also important to note that we aren't always lowering prices. For example, in the U.S., since implementing our strategic pricing capabilities in several metro markets, we've seen the net yield increase while maintaining transaction growth. Being competitive when and where it matters is what is most important, not always having the lowest price. Our aspiration is to be the retail partner of choice for our agents. It is one of the reasons that we like the opportunity to acquire Intermex. Intermex is known for its high-quality agent support model, notable for things like answering the phone in under 10 seconds. Its disciplined go-to-market model and a strong focus on transaction level profitability.

In our journey to become the partner of choice, I am pleased to announce today that effective this week, Kroger, one of the largest grocery store chains in the U.S., has selected Western Union to now be its sole provider for remittances. An important decision factor for Kroger was the investments we have made in innovating our retail experience with kiosks, in-lane service and our new integrated point-of-sale platform that will enable Kroger to simplify the complexity inherent in our products for their frontline staff.

Beyond remittances. At the opening, I told you we are reinventing ourselves. What we are doing is going beyond remittances. The trust we bring, the access that we're creating and the 100 million customers that we have the privilege to serve are the fundamental building blocks that enable us to go beyond remittance. One of you asked me on an early earnings call in 2023, if we were indeed trying to become the company of other as it was the only thing at the time on the income statement that was growing. As many of you know, at that time, consumer services products were classified in our income statement under the robust category of other.

We have since obviously pulled that out. And now today, our Consumer Services segment has had strong double-digit growth for nearly 4 years in a row. We've done this by expanding our total addressable market outside of remittances with products and services that leverage our assets and our capabilities while meeting the needs of our customers and supporting our partners. We've entered new segments like travel money and digital out-of-home advertising. We've also relaunched and replatformed core products like retail money orders and prepaid cards. We see great promise with bill pay, both domestically and internationally across both our retail and our digital channel.

Our strategy is simple: leverage our channels to deliver high-quality products and services at good value. Every customer that comes to us for remittances creates an opportunity for cost-effective cross-selling of consumer services. For example, if you receive cash in the U.S., can we offer you a prepaid card with that? Or if you send money to your mom in Mexico, so she can pay her phone bill, how about you pay it for her directly instead. Our consumer services are the everyday financial services products that consumers need and use already packaged in a more convenient and integrated manner. Sofia will tell you more, but we expect this to become a $1 billion revenue segment for us in the not-too-distant future.

At our core, we're a payments company. We move money around the world every day with speed, accuracy, high-quality compliance and at a low cost. Our payment system has been a closed-loop system with largely a singular use case, consumer remittances. Today, it is by us for us, but we believe it can be more. It too, can move beyond what it was originally built for. Many of our Consumer Services businesses rely on our payments capabilities, but we think it can be even more than that.

We envision a future, not too far away, where we can move money for others for B2C, C2B and maybe even B2B use cases. Two important building blocks for this strategy are already underway, our real-time account payment network and our just recently announced digital asset network. Ben will discuss these at length in the presentation later. But let me say, we are very excited about what we think these capabilities can do for us going forward.

Another area that I'm proud of the progress we have made is in driving operating efficiency and creating a culture of continuous improvement. These efficiency gains have enabled us to invest in products and technology while maintaining our above-industry average margins. These investments have enabled us to reduce customer calls by 40% or nearly 7 million calls since 2022, while transactions have increased 6%. Potentially even more importantly, we've also reduced agent service calls by nearly 50% since 2022.

We have meaningfully sped up KYC processes, reinstatement and due diligence processes and done that while maintaining our exceptionally high standards for compliance. I am pleased that we have been able to achieve our $150 million cost reallocation program 2 years early. And in recent quarters, as many of you have seen, we've been able to deliver more of that to the bottom line. We remain optimistic about continuing the program and have recently begun scaling our AI investments. We are seeing impact from those investments already in our customer service, our language translations, our programming efficiency and even our risk decisioning. We are leaning into and scaling more of these types of projects to power the next chapter of our efficiency journey, which Matt will share more on later.

A long-term hallmark of Western Union has been our commitment to returning capital to our owners. We have been and will continue to be excellent stewards of our owners' capital. Over the past 3 years, we have paid approximately $1 billion in dividends and bought back almost $900 million in stock. Since I became the CEO, we have retired almost 20% of the outstanding shares of the company. We accomplished this while also resolving major prior outstanding tax obligations of nearly $0.5 billion and invested hundreds of millions of dollars in upgrading to a cloud-based infrastructure and our next-generation platforms.

We have also begun to deploy capital towards acquisitions after many years of inactivity. Most recently, we had the opportunity to strengthen our position in North America and accelerate our retail transformation with the acquisition of Intermex. We are excited about the prospects of bringing Intermex into Western Union. Not only will it be financially accretive, it will also significantly accelerate the building out of our independent agent and owned store network within the U.S. Potentially most important, it will bring a proven operating team into our North American operations.

A leading factor in Intermex's decision to sell was the prospect of needing to invest significant amounts into growing their nascent digital business while being a public company. Many of their 6 million retail customers will, at some point, look for and need digital solutions. We believe we can effectively deploy our next-generation beyond digital platform under the Intermex brand to meet those needs and continue our strategy of cost-effective digital customer acquisition and retail to digital migration. Most importantly, we will strengthen our position from the U.S. to many of the leading Latin American countries. As we lap the effects of the current immigration slowdown in the U.S., we expect the benefits of this acquisition to accelerate.

We are on an upward trajectory, and our strategy is showing promise. But we need to be able to ensure that we can sustain this over time and distance. To do so requires getting the people, the culture and the operating model right. Phrases like customer first, outcomes matter. Everyone is an owner. And my favorite change is required are easy to say, but hard to deliver.

We have nearly 16,000 full-time equivalents spread around the world who need direction, support and encouragement every day. The conviction in what we are building is widespread and real. Energy and ownership for our journey exists around the globe. Asia has become a turnaround story. The Middle East is rapidly investing and going digital. Our colleagues in Europe who are with us today, have been leading the company in retail performance. To continue and support this at scale, over the past 3 years, we have implemented OKRs.

We've installed a performance management system that aligns objectives to outcomes to performance ratings. We've increased the range of compensation outcomes. We've installed a new employee recognition program, and we've launched a company-wide skills development program for our employees. We are building a company for the long haul and a platform that can sustain and grow more than just remittances. That is what we mean by Beyond.

It is now my pleasure to turn the stage over to our management team and now Bob to help bring our Beyond strategy to life for you.

So Bob, over to you.

Thank you, Devin. It's an honor to be back here with you guys 3 years later and just as energized by the journey we're on. For those of you I haven't met yet, my name is Bob Rupczynski. I'm the Chief Marketing Officer and Global Head of Digital at Western Union. Here at Western Union, everything begins with money transfer. But thanks to the power of our digital transformation, it evolves into something far greater.

This transformation is more than just a shift in technology. It is the driving force behind where we're headed next. And this ability to evolve builds on a culture of evolution embedded across the breadth of our 175-year history.

As we look back at the vision we laid out in Evolve 2025, I believe at our core, we have built a digital advantage. And because of this digital advantage, we are moving beyond simple transactions to building lasting relationships with our customers. We're moving beyond simply sending money to delivering a customer experience that offers a full range of consumer financial services. Beyond simple rewards to creating true customer loyalty and beyond focusing only on our senders to empowering all of our customers, including receivers in every way they need across their financial lives. This is about evolving beyond who we historically have been and transforming into a truly digital company.

Our ability to connect to our customers across the digitally enabled global footprint is a unique edge. We're doing this through 3 key advantages: our customer experience, our iconic brand and our unique growth levers. Through that, we believe we will unlock 50% growth in our branded digital business. Our global presence and trusted brand continue to bring people to Western Union every single day. But being found, that's just the beginning. What matters most is what happens next, how they experience our products and services.

So let's talk about the end-to-end customer experience. We've modernized the core of our business. We've moved most of our infrastructure to the cloud, and we've reduced friction. We've recently launched our Beyond platform in Canada, which is the foundational platform for transforming this company into a digital-first enterprise. In doing so, we have positioned ourselves to be ready to serve our customers wherever and however they choose to transact.

Let's start with new customers. We've removed friction from the onboarding journey with smarter risk checks, streamlined KYC and increasingly intuitive overall experience. We've evolved our approach to risk decisioning, shifting from a rules-based approach to an approach that leverages AI models. This transformation in our risk methodology has already delivered material impact. It resulted in 17% year-over-year improvement in North America's new customer approval rates while still lowering fraud loss rates. But we're not stopping there. We've tailored our experience to fit every corridor, offering the best ones out options, competitive pricing and local languages.

In 3 of our top corridors, India, Philippines and Mexico, new customer conversion rates have increased by about 25%, some of the best conversion metrics across the entire enterprise. But it's not just our user experience, speed matters, too. Customers want their money to move fast, and we're delivering. Thanks to upgrades in our account payout network, speed of delivery has improved our real-time delivery rates to 84% in this past year. And we've built a new digital platform, which if you haven't already seen, you'll experience firsthand in the demo space after this presentation. Chris Hammer out there leading that demo booth is excited to show you all of the newly released platform in real life where you can see and you can feel the future of Western Union.

This is a modernized digital platform that enables a more seamless customer experience a cleaner interface and a faster speed to market across the world. But it's more than just a front-end upgrade that takes us from multiple experiences across the globe into a single, fully scalable platform. It connects both sides of our network, enabling better orchestration between send and receive markets. This means we can deliver innovation faster, tailor experiences more precisely and unlock new opportunities for growth across our entire ecosystem. We're leveraging that 2-sided network because every transaction is a shared moment between a sender and a receiver.

We're committed to improving both sides of that experience. Whether it's face-to-face or in digital, we're creating meaningful ways for people to connect through our service. This is brought to life later by Ben, who will share how our payment options are continually expanding, giving our senders more flexibility and our receivers more choice. We've improved what happens after the transaction as well. We're simplifying the experience with things like clear delivery times, next best actions, saved receiver info and personalized preferences, meaning sending money is faster and simpler than ever before.

By understanding customer behavior and local nuances, we are tailoring every step in the journey by showing sending limits, displaying real-time pricing and presenting delivery speeds right upfront. We've also launched a unique loyalty program packed with perks, including exclusive deals, discounts and a simple point redemption that makes every interaction feel rewarding. We're giving senders and receivers more control with features like money requests, receiver redirects, referral programs and wallet-to-wallet transfers. But these aren't just tools. They're ways to build trust and keep people coming back. As we deepen engagement and drive repeat usage, we also close the spread between transaction and revenue growth, delivering more value with every interaction.

This digital platform goes beyond simple money transfers across our markets. It's built to meet the full financial needs that are relevant to our customers. You will get as excited as I am when Sofia talks later about our ability to deliver service offerings like prepaid cards, digital wallets and bill payments. For example, let's take a look at our digital wallet. In Argentina, where it is being warmly embraced by our customers, nearly 15% of the money that is sent into Argentina through Western Union now stays within our network, deposited directly into a Pago Facil wallet. This means more financial flexibility for our customers and more value staying within our ecosystem.

We're also meeting customers where they are, whether on our platforms or integrating into experiences beyond Western Union on platforms like WhatsApp, thus embedding Western Union into their everyday lives. Of course, I'd be remiss if I didn't take the time to talk a little bit about our brand because while platforms and products matter, what truly powers our growth is something deeper, something more human. It's the emotional salience of the Western Union brand. That iconic black and yellow isn't just a logo, it's a signal of trust that's been built over generations.

And in today's digital world, trust is the ultimate currency. It's what brings people to us before we even speak. That's the breadth of our brand awareness. We're not just found. We're sought out by more than 100 million customers annually around the world. And that gives us a unique advantage as we think about how to grow, how we acquire and how we connect.

Western Union is known and trusted around the globe. In fact, our brand awareness metrics show us 86% of senders and over 70% of receivers identify our brand in this space. That kind of brand recognition doesn't happen overnight. It's built over years, 175 years to be exact, of showing up, of doing the right thing and helping people stay connected across time zones, across borders and across generations. At Western Union, we're in a unique position. No other company can match our reach both in retail and online. And that's a big deal. It means we can meet our customers wherever they are, whether they're walking into one of our retail locations or using our app sitting at home.

And when these 2 worlds come together, we create something powerful. Think about it, receivers know us. They trust us. They tell their senders, just use Western Union. It's easy. Our retail signs aren't just signs, the reminders of the reliability we have built over decades. With 360,000 retail outlets, our brand is everywhere, and that visibility helps us stay top of mind. But our story doesn't just stop with the Western Union brand. That's where it starts. We're building a portfolio of brands designed to serve a diverse customer set across markets. What began as a single brand business has evolved into a multi-brand strategy that includes trusted names like Vigo, Pago Facil, eurochange and soon, Intermex, all anchored by the strength and trust of the Western Union brand.

Each of these brands plays a distinct role in our go-to-market approach, allowing us to tailor our offerings to reach new customer segments and expand our presence more efficiently. Together, this portfolio amplifies our reach. It enhances our relevance and drives growth on both sides of the transaction. We've launched our Vigo Wallet experience in the U.S., anchored by a brand that is synonymous with value in the highly competitive U.S. to LACA corridor. Vigo's deep connection to this customer base gives us a powerful platform to expand our digital footprint and to offer consumer services in our largest market.

Think back to Pago Facil's success in Argentina, where we launched that wallet in 2023. As a trusted name in the market, Pago Facil allows us to deepen engagement with receivers by offering a localized, familiar experience integrated into our digital wallet ecosystem. But this is built on the back of over 300 owned stores where we have fostered the relationships with our cash receivers. Through this trust, we can transition those cash receivers into wallet users and continue that relationship in the digital world. Both Vigo and Pago Facil wallets offer features that matter to our customers, the ability to redirect funds into wallets, request money and transact with ease. When paired with a debit card, we give customers increased flexibility to access and to manage their money.

And now most recently, the Intermex acquisition is expected to power a renewed strength in the U.S. to LACA corridor. Their partner engagement, smart retail marketing and deep customer engagement make them the perfect complement to the Western Union brand. We're excited to bring their 6 million customers into our enhanced digital experience, one that will be powered by the Western Union platform but wrapped in the recognizable Intermex brand they already know and love. With this acquisition, we're not just expanding, we're deepening our relevance with the locker consumer.

We're building on loyalty, expanding our market presence and creating seamless experiences that will feel familiar yet fresh with a deeply engaged user base and strong brand equity in the U.S. to LACA corridor. We will layer on Western Union's digital experience and unlock new potential in a large growth opportunity. This strategic growth vector is a key contributor to the goal of $500 million incremental to the branded digital business over the next 3 years. It's a tangible example of how we're activating our corridor, country and customer segment levers to drive meaningful, measurable impact.

We've laid a strong foundation, and now we have our sight set on the next phase of growth. Our ambition is bold yet achievable. We can grow our digital business by $500 million over the next 3 years by focusing on 3 growth levers: corridors, countries and customer segments. First, corridors. While the global remittance market is growing 3% to 4%, there are a number of key corridors growing at a much faster rate. While we are focused on maintaining our leadership in high-volume corridors like U.S. to Jamaica and France to Morocco, where we are already strong. We have a large opportunity to unlock growth in underpenetrated routes like U.S. to Guatemala, where digital adoption is rising and our reach is nascent.

In addition to key corridors, we have the opportunity for country expansion. When we expand into new countries, we're not starting from 0 with over 85% global brand awareness, people already know Western Union. They trust us. It gives us a major head start over digital-only competitors who have to spend heavily just to introduce themselves. Finally, we will target high-growth customer segments. These are customers who are mobile first, who want to send higher principal amounts, who are migrating from retail. We will unlock our access to these customer segments by offering more of what they want, features like account-based payouts.

Later, I'm excited for Ben to share with you the idea that with over 300 real-time payout options globally, we're not just meeting demand, we're shaping it. Through our relentless focus on building out a next-gen payments network, we are building the capabilities to win in these higher-growth segments.

As part of the growth story, we'll continue to focus on executional excellence to maintain our momentum of low-cost acquisition and increasing retention. While zeroing in on these incremental areas of focus, we can't take our eyes off the things that have built this world-class branded digital business. Our total addressable market is far from saturated. With our agile digital platform, we're well positioned to penetrate more corridors, expand our offering into new countries and attract high-growth customer segments quickly and efficiently. This strategy enables us to achieve our goal of acquiring roughly 16 million new customers at an efficient acquisition cost below $20. All of this ladders up, and I'm even more confident today about our ability to drive that $500 million of additional branded digital revenue by 2028.

Today, the U.S. is our largest market, but we're seeing strong momentum in other regions as well. Digital transactions across the globe are growing double digit year-to-date, and we expect that growth to further accelerate. We have the opportunity to modernize our core product in key corridors, improving both send and receive experiences. Mexico is a great example of this, where wallet adoption is growing fast, and we will meet this momentum with our digital wallet in 2026. And then there's the Philippines that shows us what's possible with partners like GCash, where we've deepened our coverage materially in 2025 and unlocked incremental growth on the back of that expansion. Continuing to expand our payout options in these regions will help us serve more customers more effectively.

An equally valuable opportunity is in the corridors where we are underrepresented with large customer pools where our market share does not reflect our potential. In these corridors, we're focused on expanding our capabilities, adding more payout options, tailoring our marketing messages to be culturally relevant and ultimately reaching new customer segments. Think U.S. to India or U.S. to Guatemala. These are major corridors with untapped potential. We should be capturing 20% or more of these markets, but we are far short of these goals. Closing that gap will be a game changer for our digital business.

In the U.S. to Guatemala corridor, for example, every percentage point of share is worth $5 million to our branded digital business. And as we bring in new customers through smarter acquisition and better experiences, we're seeing more stable revenue per transaction compared to our back book, which has historically been overpriced, proving that growth and sustainability can go hand in hand. The brand strength I talked about earlier doesn't just help us retain customers, it accelerates our growth. That's especially true when it comes to country expansion.

When we enter markets like Indonesia, Senegal and the Philippines, we're not a new brand. We're not completely unknown. Thanks to our retail to digital escalator, we are able to convert long-standing retail customers that already know about us. We convert them into digital users, accelerating adoption and deepening engagement from day 1. That gives us an advantage. We just need to remind people that Western Union is here and now in digital and able to help them move money across borders with ease and confidence, whatever their preferred funds-in or funds-out options are.

Speaking of preferred payout options, when it comes to how customers want to receive money, account payout is quickly becoming their preferred choice. And it's not just a feature, it's a better way to send. Whether through our digital channels or even in person, customers who choose to receive funds directly into a bank account or a mobile wallet may enjoy faster access, higher limits and greater convenience. With direct connections to over 300 real-time payout options globally, we're making it easier than ever to send money straight to where it's needed.

And the impact is clear. Customers who use account payout tend to stay with us longer, they send more often and they get more value from their relationship with Western Union. Yes, our revenue per transaction might dip slightly, but we continue to see increased principal per transaction, transactions per customer and overall lifetime value as a result of these efforts.

Our newest customer cohorts are already showing us the power of account payouts as we're seeing a 7% lift in their lifetime transactions. As more customers move towards these account-based payouts, we're ready, not just to meet the demand, but to go beyond. We're building a future where sending money isn't just a transaction. It's a trusted experience, it's a connection, and it's a way to move lives forward. So we know where we'll grow, which corridors, which countries and which customer segments.

Now let's talk a little bit more about our competitive advantages, lower CAC, brand awareness and retention. So let's start with what's driving lower acquisition costs. It's really about precision pricing, culturally relevant localized marketing and product experiences that convert our customers. It's about optimizing every step of the funnel from awareness to repeat engagement and doing so with discipline, agility and scale. We continue to focus on both low-cost acquisition as well as funnel efficiency to drive that growth. That means attracting more customers into the top of the funnel, converting more of them and doing so at a relatively consistent cost of acquisition.

Supported by our vast retail platform, our digital platform is the engine that powers enterprise growth. It's built to scale, and it's working. We've cut acquisition costs by 50% since 2022, and we're bringing in new customers faster and more efficiently than ever before. And this is thanks to a smart mix of paid and organic media. While others are still trying to prove they're trustworthy, our organic presence proves we are already there. That means we can focus on what really matters, connecting with our customers. Our brand trust gives us a unique advantage.

We can welcome new customers without the heavy cost of acquisition that our competitors face. While others rely on aggressive $0 fee campaigns to build that awareness, Western Union is already part of that conversation. We surface through organic search. We're recognized in retail, and we're increasingly chosen in digital. With continual increases in organic impressions, this trend is not slowing. And here's the best part. Our acquisition costs continue to stay low.

Every day, millions of people encounter the Western Union brand. They walk into places that we do business. Many of them become digital customers, thanks to word of mouth and the organic trust that we've earned over time. From the days of the yellow pages to the new era of AI-assisted search, we are there when and where our customers need us. Our digital footprint is vast with millions of customers actively seeking us out to what we call pure traffic, driven by intent and trust, not just paid ads.

Across many of the highest searched keywords, we consistently rank #1 or #2. This organic reach is a testament to the strength of our brand and the relevance of our services. As search evolves, AI-assisted discovery is helping customers find what they need faster and more intuitively. And because Western Union is already top of mind, we're well positioned to benefit from this shift, meeting customers at this moment of need with speed, clarity and confidence.

And ultimately, we know that retention is the untapped multiplier, one that can unlock sustainable growth over time. As we deepen the relationship with our customer, we're not just acquiring those customers, we're increasing their lifetime value. By driving repeat engagement and loyalty, we're creating a more efficient growth model that balances acquisition cost with lifetime value. One example of our retention advantage is that we're creating experiences that connect and reward our customers by bringing both sides of this relationship closer. In fact, this year, we launched the industry's first rewards platform designed specifically for receivers. It's a way to recognize how important receivers are in choosing a money transfer provider and to offer them something that is locally relevant.

Take the France to Morocco corridor, one of the strongest remittance corridors in the world. Our Moroccan receivers are now enjoying locally relevant rewards like eSIM minute top-ups that help these receivers continue to stay connected to their senders through discounted top-ups. It's more than just a perk. It's a relevant way to keep partnering with our receivers and keep their relationships strong across borders. Since launching receiver rewards, we've seen over 1.3 million transactions from members sent to Moroccan receivers with thousands of rewards successfully redeemed. This program has driven meaningful engagement on both sides of the remittance journey, contributing to a 7% increase in transaction growth among members sending from France to Morocco.

Three years ago, I stood before you as a newly installed leader of the digital business that was struggling to keep pace with a growing market. We haven't yet found the right balance between customer experience and our unique value proposition. So we laid out a bold vision to turn things around. Today, I'm proud to say we've done just that, but we aren't satisfied with where we are today. There is still more to go. We still will continue to build on our 8 straight quarters of growth in transaction and revenue. Our new digital infrastructure is accelerating our speed to market for the critical experiences and increasingly delivers on the expectations of our customers.

We've overhauled our pricing to be agile and market competitive across our global markets. Our digital platform is the engine behind our transformation. We started with a legacy platform overhaul. In 2023, we refreshed that platform in almost 20 of our top markets. And now in 2025, we've taken steps or I should say leaps, as I would call them, towards the future of the Western Union digital platform, one that is both world-class in its customer-facing experience, but also in its technology back end that allows us to scale rapidly across the globe.

This platform is helping us grow not just in the numerous financial services that we offer and deeply into wallet and broader financial services like bill payments and stored value accounts, but also in the vast numbers of markets and corridors we serve. That is why we are confidently on a path to build a $1.5 billion digital remittance business supported by Western Union's full range of financial services. Foundational improvements are driving strong, consistent growth. These gains are durable. We're seeing 30% growth in account payout transactions, improved customer retention and customer lifetime value that's up 18% over the past 5 years, while our prices are down.

These results show that our core engine is working and will continue to deliver growth. But what truly sets us apart is our iconic brand, trusted by millions across borders and across generations. That trust gives us a unique advantage in a fast-moving digital world, allowing us to scale efficiently, connect emotionally and remain top of mind for our customers around the globe. We're activating our 3 key growth levers, expanding share in high-volume and underpenetrated corridors, entering trusted countries where our brand accelerates adoption and serving high-growth customer segments like mobile-first and high principal senders with our next-gen account payout network.

These efforts are amplified by our competitive advantages, lower cost of acquisition, higher brand awareness and escalating retention. We are operating in a moment of industry transformation where digital adoption is only accelerating. But together, these foundational strengths, our iconic brand and the strategic growth levers position Western Union to not only meet our $1.5 billion goal, but to lead the future of moving beyond remittances.

Thank you. And I would love to pass the stage to Giovanni to talk about our retail.

Thank you, Bob. Good afternoon. [Foreign Language] everyone. Thank you all for being here with us today. For those of you I haven't met, I'm Giovanni Angelini, President, Europe, Middle East, Africa and Asia. I'm sure you have understood in the last few seconds that I'm Italian. So bad comparison with Bob, I speak Italy. I have 25 years of experience in the money transfer industry. Before Western Union, I started as the General Manager and the CEO of one of the largest Western Union agent in the world, Angelo Costa, based in Europe, spanning 10 countries.

I then joined Western Union through the acquisition of this agent to run our European business. Since then, my role expanded to cover the regions I lead today. I'm also responsible for our global retail strategy. Bob outlined the exciting growth opportunities in our digital business. My good friend, Massimiliano, or as we all call him Max and I will talk to you about the equally exciting opportunities we have in our retail business.

First, I will talk about why our retail business is important to our company. It is a strategic asset that helps drive our entire business. Next, I will talk about taking our retail business Beyond, beyond cash, beyond remittance. Then I will speak about what drive a successful retail business. Finally, I will hand it over to Max. He will talk to you about the success he has in our retail business in Europe.

A great proof point that shows that our vision and strategy are working. And importantly, we are confident we can replicate that success around the world and here in the U.S. to retail. We will show that by implementing our retail strategy across the globe over the next 12 to 18 months, we aim to achieve stability across our retail business. We live in a world that is increasingly digital. Why then is our retail network such as an important asset for Western Union? First, it gives us an incredible global reach. Our retail network is the top channel through which we drive visibility of our brand. It is a key customer acquisition tool.

Let me give you a few top line numbers. We have a global retail network of over 360,000 locations. 80 million customers walk into our retail location every year. They drive $2.4 billion in annual money transfer revenue. Through cross-selling, our retail consumer services drove more than $400 million in revenue in our retail channel in 2025. This location drive more than 50% of our brand discovery for all our business, both physical and digital. And there is more. This brand discovery enables the digital customer acquisition cost that Bob mentioned earlier.

Next, our $64 billion in principal and 160 million retail transaction gives us scale, scale that our smaller and digital-only competitor do not have. It drives efficient technology investment as we can spread development costs over our large volume base. In this way, we can develop advanced digital capabilities more cost effectively than our competitors can. We are often able to secure better commission and foreign exchange rate as our volume gives us improved negotiating power. This means better rate for our customer and a lower payout cost. And most importantly, we benefit from this scale across both our retail and our digital business, a unique advantage that is difficult to replicate. Finally, this leads to strong margin performance.

Now let me go back to our million of retail customers. They send money back home to their families and loved ones. So they want the security the personal service provides. This customer value the personal relationship they built with our agent. This relationship build trust, trust that is impossible to replicate in a digital-only environment. For this customer, our retail network is the #1 option when they need support for the transaction. This is even more true when they know they can talk to a retail agent that many times comes from the same metric group, an agent that speaks the same languages.

Western Union retail location is often the first stop for new migrant coming into new places. For many of our customers, our retail location, our ethnic agent are where they build their first cultural connection with their new country. All of this leads to long-lasting relationship. It lies at the core of why our retail business is durable and sustainable. This is something our digital-only competitors cannot provide.

Now let me talk to you about our remittance market and how it impacts our retail business. Current market condition in many parts of the world are under pressure. Historically, the market has been growing 3% to 4%. And importantly, subsegment of the retail remittance market, such as the account payout are growing double digit, and we expect this growth to continue. We are also confident that there is an important upside opportunity for us in many key markets. We are gaining share in high-growth underpenetrated received market.

Our top 10 alone represent $80 billion in market principal growth opportunity through 2027. We are driving this by gaining growth in underpenetrated or underperforming send market such as Germany and the U.S. While cash is declining, cash to account and wallet is growing double digit. This also represents an important growth opportunity for us. There is still opportunity for growth in remittance.

Now let me speak to you about our plan to take retail beyond remittance. Western Union is in a position to leverage our global retail asset and our unique relationship with customers to go beyond cash remittance. We aspire to be a leading provider of accessible financial services for people everywhere. To do that, we will leverage the network in 3 ways.

First, our retail business is a bridge to our digital services. It enables a low cost of acquisition for bringing customers into our digital business, as Bob talked about earlier.

Second, we can leverage our retail network as a platform to better serve these customers. We do that by giving them access to our expanding consumer services such as prepaid card, travel money, bill payment and retail money order.

Third, we will also leverage this retail network to give our customers on and off-ramping of cash into our digital products to pay cash for online shopping and to cross-sell other consumer financial services. Bottom line, we will leverage this network as a bridge to give people access to digital financial services all around the world.

Before I turn it over to Max, let's talk about what it takes to unlock growth with our retail business. First, we need the productive network, a network that provides great customer experience. For us, it is not just about having the largest network with global reach. It is about having the right network. Second, to provide great customer experience, we must provide great agent experience. We are doing this through our upgraded global retail platform. For us, it is critical to offer the right platform. This platform needs to be simple, fast and easy to use and also enables digital funds-in and funds-out capabilities. We also need the right operating model that enables us to execute with efficiency and effect.

You may then ask, can we stabilize our business? Can we execute our vision of going beyond cash beyond remittance to drive a growing retail business? Can we turn this business around and contribute to Western Union overall growth story? The simple answer is, we can. We are already delivering on our vision for our retail business in Europe. We are delivering on every element of the retail acceleration strategy I just outlined.

It is my pleasure to turn it over to Max, the Head of our European business. He will talk to you about the success in retail we are having in this region and hopefully give you confidence that we can deliver a growing global retail business.

Max, over to you.

Thank you, Giovanni, and thank you all for being today here to hear about the exciting opportunities we have to replicate our European retail success in the rest of the world. I'm Max Alvisini, yes, a second Italian on the stage in less than 15 minutes. I have more than 25 years of experience in the financial services, having lived and worked in Italy, Spain, U.K., Ireland and most recently in the U.S.

Today, I manage Europe, our company's second largest region in terms of revenue. This is a region that includes some of our top markets globally. For the last 6 months, I have also been managing our retail business in North America. This is another great challenge, but also an opportunity for our retail business. In our European retail business, we are growing 13% and gaining market share. Yes, you heard that correctly, 13%. To put that in context, when we began this journey in 2023, our Europe business was declining 12%. This is a 25% turnaround.

How we are achieving that? We focus on executing our retail acceleration strategy, including the 3 key drivers of growth that Giovanni outlined: building a productive network, leveraging our upgraded global retail platform and implementing efficient and effective operating model. We are confident that by implementing these drivers, we can bring our North American business and our global retail business back to growth. Our success is based on something fundamental, making every location in our network productive.

Let me walk you through the approach to network productivity and why getting this right is critical to our growth. Broad coverage matters for customer convenience. What matters even more is what happens when customers walk through the door. Productive, experienced agents deliver great customer experience. Today, our European network is almost 100% productive. We have eliminated hundreds of dormant locations.

Why that is important? First, as I mentioned, customer experience is critical. Productive agents provide better experience. Second, eliminating dormant location means lower cost, such know your agent and compliance training. This drives stronger customer growth and retention. This productive locations are better for customers and are also more profitable. This means happier agents and better agent retention as well. It's a win-win. The composition of our network is key on how we drive productivity up. At the top of our target productivity model, we are expanding our own store network in places with high concentration of target customers. This own store locations are 10x more productive than the average.

When we add our North American acquisitions, we will have about 200 owned stores in the U.S. to add to our 1,000 own store elsewhere around the world. And importantly, this location provide a great platform to offer our expanded set of products to our customers, such as travel money, prepaid cards, bill payments and others, as Giovanni mentioned, as you will hear more about later from Sofia.

In the middle, we are filling white space with ethnic independent location and branded exclusive stores. These are also very productive and ethnically relevant to our customer. Through our Intermex acquisition, we are expanding our nonexclusive independent agent network, which is a gap for us in the U.S. At the bottom, we are maintaining existing and winning new large strategic networks to provide broad coverage and convenience. Each type of agents play a critical role in serving our customer and driving productivity and profitability.

On the receive side, we are equally focused. We eliminate nonproductive location and optimize our network as the payout market shifts to account payout. The second driver of our retail strategy is something our agents and customers feel immediately. We are upgrading our global retail platform and driving growth through digitizing our retail business.

Let me tell you what we have accomplished in Europe on this front. We have fully deployed our modernized retail platform. The difference has been remarkable. We have added features, including a new simplified user interface, a new funds-out experience and increasing transaction speed. The feedback from our agent has been fantastic. They can serve customers faster and more efficiently than ever before, but we are not stopping there. We are now integrating consumer service offering into the platform. In that way, we announced our ability to cross-sell to our customer and be a one-stop shop for financial services for our agents. A great example of this is with our travel money service in Europe that now represent more than $100 million in revenue.

In 2022, when we launched our Evolve 2025 strategy, this business did not exist. Another important element of our retail platform is changing the way our customers interact with us. We are rapidly digitizing the entire retail customer experience. Retail is not only just sending cash anymore. It's about convenience, service and value. Historically, we were a cash-to-cash focused business.

We are now rapidly digitizing our global retail network through digital funds-in and funds-out methods. Over the past few years, we have been scaling card acceptance in our key send markets. We have scaled our debit card funds-in, in Europe. This now represent over 12% of our transaction, and we expect this transaction to grow double digit. We have also been launching card acceptance in the U.S. and are currently at 4% of transaction with more opportunity to scale to reach our European benchmark.

On the payout side, we're also seeing impressive results. We are rapidly expanding our digital funds-out capability. Our bank account and wallet funds-out penetration from European initiated transaction is over 20% of the total transaction. It's growing more than 30%. The rest of the world is less than 50% penetrated. This gap represents an important opportunity for us globally. What is exciting is that both digital methods serve as a first touch point. They are a bridge to full digital transaction for customers.

The next critical thing we implemented in Europe is a more effective operating model. This model comprises 3 key elements: go-to-market sales team, corridor management and strategic pricing. We expanded our network in Europe with hunter, farmer and inside sales team. These teams are expert at identifying and signing the best location. They also maintain highly productive location and collaborate with agent partners. Next, we are back to our roots and executing focused corridor management. Every corridor, every location, every customer segment has different dynamics. This required targeted marketing communication, multiple products and funds-in and funds-out combination. It also requires strategic pricing.

So we have implemented localized pricing and management of our foreign exchange rates. It's not a one-size-fits-all approach anymore. This is critical to compete in the money transfer space. Where we have implemented this in Europe, we have improvements in volume growth and revenue turning positive to mid-single-digit growth, constantly outperforming corridors that are not using strategic pricing.

Today, more than half of our retail transaction in Europe are using strategic pricing. We are expanding this to North America, where we have recently rolled out our strategic pricing in 5 metro markets and with much more expansion in 2026. Few would have told 3 years ago that we would turn around Europe, a decline mature region with serious geopolitical headwinds, tough competition and some of the most restrictive regulations in the world. We had a clear vision for our business, the right strategy and a sharp focus on execution. In the end, our vision, our strategy and our execution paid off.

Today, in Europe, through our highly productive network, our upgraded global retail platform, our efficient operating model, we have proven playbook that we have leveraged to deliver impressive growth rates in our region. We believe that we can execute this strategy, we can create great results across the board. We are now bringing this same formula in North America, where I am spending a lot of my time. We are making progress, and we are confident that we can use this playbook to stabilize global CMT retail over the next 3 years. After turning around Europe, we are ready to turn around our retail business globally.

Thank you. I will now hand back to Giovanni.

Thanks, Max. So how do we take this to the rest of the world? As you just heard, Max and team have executed our retail acceleration strategy in Europe and they are growing double digit. We are now executing that retail acceleration strategy in the Americas as Max, and we will leverage our Intermex acquisition to further support the turnaround of that business. All these elements of our global retail acceleration strategy will help us deliver on our mission to stabilize our retail business. But I'm especially excited by the impact of our retail platform improvement and our growing digital funds-in and funds-out capabilities.

I hope you all now have a clear view of how retail power growth across Western Union. Our retail network is a strategic asset. It drives brand recognition, customer acquisition. It enables us to go, beyond, beyond cash, beyond remittance. It feeds our digital business and our consumer services business with a low customer acquisition cost. We are 100% focused on driving growth in our retail business. We believe we have a clear path to get there. Our success in Europe gives us confidence that we can do this.

Thank you, and please give a warm welcome to Sofia Graniello, who will talk more about our Consumer business services.

Thank you, Giovanni. For those I haven't met yet, I'm Sofia Graniello, SVP of Consumer Services for North America, and I'm only partially Italian. So I joined Western Union slightly under a year ago, excited by the company's mission and all the work that you're hearing about today. Before that, I spent the last 20 years working in consumer financial services, which is why I'm particularly excited to share what we're doing in consumer services.

Bob, Max and Giovanni mainly spoke to you about our remittance something we have done for a long time, and we have done well. They also touched on how retail and digital enable consumer services, but we haven't shared much about this business as it wasn't a significant contributor when we last spoke to you in 2022. Consumer Services is where we can really go beyond. I'm thrilled to share how we are building a business with an achievable path to $1 billion in revenue by 2028.

We have created value beyond remittances with a suite of products that meet the payment needs of a mostly underserved population. We have a low-cost acquisition engine. We leverage our existing channels, digital, retail and our business partners, maximizing reach while minimizing cost. Plus, we have significant market expansion opportunities. Our portfolio is still nascent. We're investing in expanding customer adoption, products and geographies.

In 2022, we didn't really have a carved-out Consumer Services segment. We referred to the opportunity, but now it is a reality. Since Evolve '25, we have focused on growing this business, and we have made significant progress. We modernized our platform so we can offer more. We launched new products, improved our product delivery experience and expanded into new segments. Revenue for this segment has grown to reach 15% of our total company revenue. We have done this through both organic and inorganic investment and have delivered profitable growth. But we're still at the early stages of developing this segment.

So what is Consumer Services? It is a business that goes beyond remittances. We recognize our unique opening to meet the needs of our customers. They're often underserved by traditional institutions and have strong ties to Western Union. To do this, we have assembled a suite of accessible products that we can offer to millions of customers globally. We believe we are uniquely positioned to do this given our existing customer relationships and the strength of our channels. This combination allows us to operate a diversified financial services business at lower costs than traditional financial institutions who cannot serve these customers' needs efficiently due to their economics.

Our Consumer Services business encompasses a broad set of products and services. Today, it generates around $500 million in revenue. Our portfolio can be grouped into 2 categories: transaction-based products such as bill payments, retail money order and travel money and account-based products, which include our wallets and prepaid accounts. These products serve millions of customers across 30 countries. The business has delivered a CAGR of nearly 25% over the past 3 years. We see opportunities to continue this double-digit growth through 2028 and beyond.

With our consumer services offering, we can fulfill the needs of our existing customers beyond remittances, and we can also expand the segments we serve. Today, we serve more than 40 million senders. These individuals first come to us so they can send money home to their loved ones. They may be new to the country and may not have convenient ways to manage their finances. Banks and other institutions can't always serve them with the transparency and simplicity they seek or at a price that works for them, but we can help them. We're a brand they trust, who can help them meet additional financial services needs beyond a money transfer.

We also have the privilege of serving almost 70 million remittance receivers globally. You heard Bob talk about our 2-sided network. Receivers are increasingly becoming active participants in that 2-sided network. They can receive funds through wallets and prepaid cards. And now that they have received funds and stored them with us, we are well positioned to help them use these funds effectively for their payment needs. Over 70% of receivers surveyed expressed interest in using Western Union for additional financial services products. We are focused on launching services aligned with what they tell us is important to them.

With this approach, we are turning payouts into new opportunities. And this is only part of our story. We have developed marketing capabilities to direct them into these products. For example, we leverage WhatsApp and SMS to prompt receivers to redirect transfers directly into our wallets. In Romania, 40% of new wallet accounts have come from these redirect tactics. In the U.S., that number goes up to 70% for our Vigo Wallet. By the way, if you haven't experienced our Vigo Wallet in the lobby, please make sure to do so later.

Finally, we also serve customers traveling internationally. While this includes our traditional customers, it also taps into a new and growing segment of leisure travelers who have a need for flexible multicurrency solutions. When these customers travel abroad, they seek travel money solutions as they can find cash and travel cards faster to pay with and easily accepted wherever they go. They prefer to get these products at exchange stores like ours as they offer quick and secure transactions.

As Bob and Giovanni covered in their presentations, a key strength of our business is how efficiently we acquire customers at scale and at a low cost, thanks to our digital and retail channels. Over 80 million customers walk into our stores and over 10 million customers log on to our digital app every year. But in addition to those channels, we also bring in new customers efficiently through our extensive network of business partners. A unique component of the consumer services value proposition is how we connect individuals and businesses. We serve thousands of businesses globally that need to capture from or disburse payments to individuals.

When we engage them, they bring new customers to our platform at almost no cost to us. For example, in the U.S., we offer a bill payment product. We work directly with utilities, rent management companies and telco providers to help them collect customer payments. When we enroll one of these billers as a partner, we may unlock access to thousands of new customers. These customers may come to us initially just to pay that one bill, but that's the entry point. From there, they can discover and use our broader suite of products. Many of these customers live in a cash-first world. They may not have a traditional bank account or access to credit. For them, we're not just a payment processor. We're a trusted financial access point.

Similarly, we also serve businesses that disburse payments to individuals around the world. Adding one of these partners helps us generate multiple transactions, connecting us to their receiver base.

So how do we grow consumer services to a $1 billion business? It comes down to 4 things. First, we're deepening engagement with existing customers by delivering additional products tailored to their evolving needs. Second, we are transitioning many of these customers from transaction-based relationships to account-based products. We do this to foster longer, stickier relationships. Third, we're broadening our portfolio. We have and will continue to develop and launch new solutions that address market demands. Fourth, we will continue to expand the footprint for these products by scaling proven offerings across geographies. By focusing on these 4 levers, we can continue to drive growth.

One of the most effective ways we drive growth is by penetrating our existing senders and receivers with additional products. For many customers, their journey with Western Union begins with a money transfer. This initial transaction builds trust and opens the door to deeper engagement. For example, customers who receive a money transfer can now do so on a prepaid card. In a 12-month period, these customers received 12% more transfers than those without a card. Prepaid customers who also perform money transfers make 70% more transactions than prepaid-only customers. Today, about 25% of prepaid users are also money transfer receivers. They use the card to pay for gas, restaurants and online purchases with the funds they have received. A single money transfer transaction has turned into repeat engagement.

A second example, a customer who uses Western Union to pay a bill also tends to make multiple transactions with us. Over 30% of bill pay customers pay 6 or more bills with us in a 12-month period. Those who engage with Bill Pay and Money Transfer do 200% more bill payments and transact 80% more times than a customer doing a money transfer alone. These are just some examples of how we're creating repeat engagement. Our goal is to drive further penetration of the Money Transfer customer base through consumer services. We also want to move beyond transaction-based relationships towards account-based relationships and transform how customers interact with us.

Three years ago, we shared our vision to launch a digital wallet as a cornerstone of our strategy. We have not done something like this before. Over these 3 years, we've learned a lot about what it takes to do this effectively, what works well from a design, technology and go-to-market perspective. We're now able to have a digital wallet at the heart of the strategy to create account-based relationships. Building on what Bob shared earlier about our wallet, we have traditionally seen receivers as passive endpoints in a transaction. With the wallet, we can have both the sender and the receiver do more than just move money.

A wallet account provides customers with the convenience of having multiple functions in one single place. I mentioned earlier that over 70% of receivers surveyed expressed interest in getting more products from Western Union. Well, this number goes up to 87% for wallet users. This shift towards accounts is starting to change customer behavior.

Let's take Argentina as an example, where we have had a wallet since 2023. More customers are now choosing to receive funds directly into their wallet. Bob shared earlier that nearly 15% of all transactions in Argentina are sent directly to or redirected to our wallet. Why is this behavior shift so important? Well, wallet customers are more engaged. Wallet users receive 2x more money transfers than those receiving money through other channels. This is driven in part by a behavioral change in receivers, where the wallet has empowered them to actively request the money transfer.

But here's the real unlock. Our wallet offering is evolving into a multifunctional financial tool used not only for sending and receiving money, but also for storing funds, everyday spending and even accessing credit through our partners. Sticking to Argentina, we see our wallet users there averaging 10 purchases a month with their wallet. By expanding the wallet capabilities, we're delivering more value to our customers while simultaneously diversifying our revenue streams. We're not able to capture revenue from interchange, deposit interest and additional usage fees.

While we focus on Argentina, we also see similar patterns in Romania and Brazil. This provides conviction to continue to build and launch in more markets. Our wallet product is now live in 7 countries. This expansion has been deliberate, strategic and customer-centric, and we're continuing to expand. We're preparing to launch in Mexico and Australia. This is still early days, but our wallet is designed for scale. It's built to grow with our customers, expand into new markets and evolve to meet their full range of customer financial needs.

Bob described earlier how we have overhauled our back-end infrastructure to allow us to scale rapidly and how we're moving to integrate our money transfer and account products into a seamless experience. As we continue to innovate, the wallet will become an even more powerful growth platform for us. But we're also expanding into new product categories. Our global brand and reputation of money movement have enabled us to expand naturally into the travel money space. Travel Money opens the door to a wider customer demographic than is traditionally considered to be our core.

Both immigrants and international travelers can purchase travel money and load prepaid cards with multiple currencies at the over 500 stores across more than 10 countries where we offer these services today. This is driving over $100 million of revenue in 2025 on path for more than $250 million in 2028. Travel money transactions tend to have a higher principal per transaction than money transfer. For instance, in the U.K., the average principal for a cash travel money transaction is 20% above that of the equivalent money transfer transaction. In Brazil, we're integrating FX services into wallet experiences, offering customers seamless access to currency exchange alongside digital financial tools.

We spoke earlier about how Consumer Services is unique in that many of our products connect businesses and individuals. Another way we're expanding our offering is by turning our retail locations themselves into a media channel to reach customers. In 2024, we launched the Western Union Media Network, which enables businesses to reach our customer base through targeted advertising. We now have over 2,000 venues delivering over 50 million impressions daily, and we continue to grow our presence. This platform provides companies across industries with access to a hard-to-reach population. It also provides benefits to our agents as we have delivered one additional tool for them to extract revenue from their retail footprint. This, in turn, generates value to our business.

We can do this easily because we have the customer base and the retail presence. Many of our most impactful product developments are rooted in the insights we gain from our customers. One of the most consistent and urgent opportunities we've identified is the need for access to credit. To meet this need, since 2023, we partner with lenders to distribute installment loans to our customers. For example, we're doing this in the U.S. and Argentina with Oportun in Santander. Our lending distribution business in Argentina is now significant enough that its revenue fully covers the real estate cost of our owned stores. As we continue to learn and refine our approach, we're poised to scale this offering.

Also in '24, we signed a global card issuance agreement with Visa that underpins our global prepaid and debit card strategies, which we're focused on accelerating.

As I mentioned earlier, consumer services products are currently only offered in 30 of our 200 countries. We're expanding that geographic coverage, bringing our services to more markets and more customers. Our transactions-based services are currently present in North America and a handful of LACA countries. We're actively working to expand these offerings into all regions. One key area of focus is scaling our consumer-to-business payments infrastructure to support bill pay and merchant payments in more markets. We're also scaling travel money. In Europe alone, we're planning on adding over 1,700 distribution points. But the opportunity doesn't stop there. We're looking at expansion in Asia, LACA and North America. And as I mentioned earlier, we have planned rollouts for our wallet in Mexico and Australia.

Let's talk about where Consumer Services is headed. Today, this business generates over $500 million in revenue, but we see a clear and achievable path to doubling that, reaching up to $1 billion in 2028. So how do we get there? It starts with growing our core. Our existing $500 million engine is strong, but still nascent. We aim to continue growing this business at double digits. This growth will come from both organic and inorganic opportunities. Organically, we seek to continue driving customer penetration, product and geographic expansion. It includes launching wallets in new markets and expanding our digital reach, as Bob talked about.

It also includes stablecoin-based products, which Ben will speak to shortly. We will leverage M&A to further expand our product portfolio and build our future. This isn't just about revenue. It's about evolving who we are. We're moving from being primarily known as a cash-to-cash remittance company to becoming a broader financial services platform, one that meets customers where they are and moves them beyond.

I'd like to close with a few takeaways on Consumer Services. As I mentioned earlier, this business is $500 million in annual revenue, growing at a CAGR of nearly 25% for the past 3 years. This is a strategic growth engine for Western Union, and we are on track to grow revenues up to $1 billion annually by 2028. We believe we are well positioned to do this given our compelling value proposition as a provider of diversified financial services at favorable economics driven by our diverse customer base and distribution advantage. And finally, we have significant expansion opportunity. Our portfolio, as I mentioned, is still nascent, and we're investing in expanding customer adoption, products and geographies.

Thank you very much. I'll now pass it over to my colleague, Ben, to talk to you about NextGen Payments.

Thank you, Sofia. Good afternoon. I'm Ben Hawksworth, Chief Operating Officer at Western Union, and I lead product, technology and operations for the company. It's not often that the tech, product and ops guy is on a stage like this. So I'm excited to be here today talking to you about something beyond uptime, technology road maps or how AI is transforming our customer service. With a little over 2 years at the company and with over 25 years of technology and payments leadership experience, I am proud to talk to you about something that's at the heart of it all.

Since last Investor Day, we have made significant progress on many strategic product and technology initiatives. But today, let's focus on one that powers everything you've heard so far, our payments network. This is the part of the story where we go under the hood into the engine room and show you how we're building the future of money movement. You're going to hear 3 things. how we've built one of the best payments networks in the world, which is real-time, global, interconnected and how we're expanding it to do even more. How that network enables our business, improving conversion, lowering cost and capturing growth and how we're creating new value from the network, opening it up and expanding into digital assets as we announced last week at Money 20/20.

So let's start with the network. What you just heard from Sofia is how we're expanding our consumer services from bill payments to wallets, lending and travel money and how our retail and digital channels give us a low-cost, high-impact way to reach millions of customers. Bob spoke to you about how our digital platform is now a scaled engine, growing transactions, improving customer experience and enabling account-based relationships. Giovanni and Max talked about how our retail network is one of the largest in the world, and it's been modernized to serve as a bridge to digital and a hub for financial services. Together, these channels give us reach, trust and scale. And they're powered by the payments network I'm going to talk about next.

Western Union is already one of the most trusted payments companies in the world. And we also have one of the most scaled remittance networks on the market. Through our account payout network, we can pay out money digitally across 165 countries and territories with real-time capabilities in over 140. And here's the part that matters. In those countries and territories with real-time networks, we have over 300 active funds-out connections. Of those, over 180 have been brought online in the past 3 years. Those, in addition to the more than 270 real-time funds-in options we currently provide means our customers have over 81,000 possible pathways that are fully digital and real-time for both sides of the transaction.

Our network expansion has been met with strong customer adoption. In just 3 years, the number of transactions directed via our account payout network has increased 100% from 35 million to 70 million digital payments a year. This supports our growth in the branded digital business, but is also a key part of the retail story you heard from Giovanni and Max. But we aren't stopping there.

New digital wallets and new real-time networks are still being developed, and we strive to provide choice for our customers now and moving forward. But this isn't just about reach. It's about reliability and speed as well. Our customers trust us to move money quickly, securely and globally. And we're delivering on that promise every transaction to millions of customers.

So what do we mean when we say a real-time payments network? We define a real-time payments network as the end-to-end system that moves money across the world, funds-in, compliance, risk, processing and funds-out all in under 15 minutes. Market demands for great account payout options is table stakes. To that end, we have brought online over 180 real-time funds-out connections and doubled the number of transactions delivered via account payout in the past 3 years. Our funds-out capability is not only giving our customers more choice and their receivers more flexibility, but it is also enabling our growth in branded digital as well as retail, as you have heard.

I'll share more about our success and some examples of funds out in action in a moment. But the real value where Western Union is moving beyond is through a focus on funds-in. Western Union is one of the few companies in the world that is building funds in rails at scale across cards, wallets and local bank systems in markets where others won't or can't. Our global agent and licensing footprint gives us the ability to integrate with local payment systems across the globe, enabling us to offer local payment experiences and a differentiated value proposition. The more funding types we support, the easier it is for our customers to transact.

Obviously, in today's landscape, the more options you provide to fund a transaction, the more competitive you are. For example, if you only offer bank account options for branded digital customers and someone wants to use a card or wallet, you lose them. We don't want to lose them. We want to serve them. So why is there so much value in funds in? The answer is because it is a fragmented and complex network. Card networks are global, but card acceptance, real-time bank funding and wallets are local and require unique integrations in each country or region. This is where we shine. We are building a global funds in network that meets customers where they are, whether that's a debit card in the U.S., a QR code in Brazil or a local wallet in Kenya.

In Germany, as an example, we offer senders the ability to fund a transaction using card, wallet and bank account options. We've built those integrations using leading fintech banking and payments infrastructure to assemble a globally resilient payments acceptance network that offers a local experience and real-time funding options to Western Union customers. This is a key differentiator that is critical for us to achieve our growth targets that you heard Giovanni and Bob talk about. This same model is being replicated across our network. Today, we offer more than 300 unique funds in methods across the globe, with over 95% of those providing a real-time experience to our senders.

We're building infrastructure for our future and believe we can leverage it for others to use as well. We have the potential and the vision to become the leading real-time payments network for a wide range of use cases beyond C2C remittances. That's differentiated, and it creates value by lowering acquisition costs, improving conversion and expanding our addressable market. We are building a leading real-time payment network by taking a holistic approach that emphasizes global reach, direct connectivity and cost efficiency, all while maintaining an exceptional customer experience. Western Union's focus is on all 4. We're not just a global remittance provider, we're a payments company.

We have scale and our direct connections are growing, allowing us to move money faster and more efficiently. And here's the kicker. We're building this to power us and others for B2C, C2B and potentially B2B partners who want to move money globally, instantly and reliably. This idea is already enabling partnership conversations and fueling a new avenue of growth in our Consumer Services business. We are on the path to having a truly interconnected payment system, connecting local and national rails together in a real-time network.

Today's payment landscape is fragmented. There are many real-time national payment schemes like SPEI in Mexico and SEPA in Europe and digital real-time wallets like GCash and Alipay in Asia. Connecting directly to them one by one is difficult and tedious, but we're doing it. We are creating one seamless global network across these disparate payment options. And in some cases, we even have banking licenses, which allow us to connect to certain payment networks for little to no cost. Network aggregators are a quick way to gain reach but are more costly, reduce approval rates and add complexity to the customer experience. So we are increasingly going direct.

By directly connecting, we bypass the complexity. So not only does the money move securely and in real time, but it goes where the customer wants it, be it to a bank account, wallet or card. That's a differentiator, and our customers are embracing it. So you might be asking which countries are in our network. Well, we have real-time payments functioning in our key payout corridors like India, Mexico, the Philippines, Colombia and the list goes on. We plan to grow the network even further, connecting to hundreds of real-time payments and wallets around the world to meet the growing customer demand, paying out to where the money is needed most. And so this goes beyond money transfer, as Sofia mentioned.

This payments infrastructure is critical to support the expansion of bill payments and B2C payments to more markets. With nearly 90% of our connected countries paying out in real time, that gives our customers access to over 150 bank networks, nearly 100 card networks and just shy of 50 wallets. Yes, even more when we include non-real time. We have one of the largest secure digital payout networks in the world, giving our customers choice. That's why they choose us over and over again. They trust us to move their money every day to where they need it most.

Here's the impact. Our average account payout commission has dropped by over 22% since our last Investor Day, and we're not done. We aspire to a future where partners bid for our volume over our rails, and we have examples where that is already happening. As previously mentioned, in that same period, our digital payouts increased about 100% from $35 million to almost $70 million, and we believe we will continue to drive this conversion to digital payout where our commission is significantly lower than a cash payout. That's tens of millions in savings and a direct driver of future EPS growth.

Now let's take a look at how this can play out in an individual country. I'm going to talk to you about the Philippines. This is an example of a country where we bypass an aggregator and connected directly to a wallet called GCash in April of this year. Since that happened, we've grown GCash directed payouts by over 30% globally. And in branded digital, we have seen nearly 20% growth. These are the types of numbers we are striving for globally. This is how our payments network creates customer and shareholder value.

Okay. So now let's think a little beyond, beyond what everyone might expect from the historical Western Union. Our robust network was built as a closed-loop system, reliable, secure and controlled. We haven't monetized it yet, but we envision a world where we open this network up. It is after all a super highway. Sending more transactions across the network won't slow down the payouts, and we experience economies of scale with each additional transaction. When we open up our network and allow others to ride our rails, we can monetize the infrastructure itself, not just the transaction. This also positions us to lead in the next evolution of money movement, stablecoin and digital assets.

So how are we moving into stablecoin? Well, we're taking a bold 3-part strategy, leveraging our scale and building upon our end-to-end network. First, we see stablecoin as an unlock in treasury management. We tie up hundreds of millions of dollars all over the world to prefund transactions. By settling in real time, we can more effectively manage prefunding across our partner network. Second, we want to drive utility for other wallets to tap into our vast network. So we're building what we believe to be one of the largest on- and off-ramp networks for digital assets in the world called the Digital Asset Network. And third, creating value for our customers by launching our own stablecoin called the U.S. dollar payment token or USDPT, allowing customers to buy and hold and more importantly, send and spend our payment token inside and outside of our wallet.

So let's talk about the digital asset network. We are building what we believe to be the largest on and off-ramp network for digital assets in the world, and we're doing it now, enabling our current and next generation of customers and partners to leverage our expansive global payout network that you heard us describe to turn digital currencies into fiat. With our recently announced digital asset network, Western Union becomes the bridge between on-chain value and real-world fiat. We expect that in the first half of 2026, we will activate funds out ramps and have already signed up 4 parties that will be able to light up hundreds of wallet ecosystems. This is not just a pilot.

This will be production scale powered by our retail stores and digital payment networks, our onboarding APIs and our global compliance muscle. Our fee structure is simple. That means the digital asset network participants win, customers win and Western Union monetizes at scale from day 1. We are also talking to other wallets, exchanges and payment platforms across a number of markets. Our goal is clear. Hundreds of wallets integrated with our digital asset network, making Western Union the widest distribution footprint for digital fiat ramps in the industry, supporting customers where and when they need access to funds.

But we are not stopping at connecting our retail capabilities to the digital asset economy. We have bolder ambitions and want to be a key player in defining and shaping the digital future. Western Union plans to issue USDPT, our fully reserved USD stablecoin on Solana, one of the fastest, most cost-efficient blockchains in the world. Solana gives us high throughput, low latency and near 0 transaction costs, which means our payment token will be able to move at Internet speed. We are building USDPT with Anchorage Digital, a regulated institutional-grade custodian and infrastructure provider. This is a payment token engineered for compliance, security and interoperability from day 1 and will power our customers, treasury, agents and partners.

We aspire for our payment token to be adopted around the world as a transition between digital and fiat currencies. Why? Because Western Union has something few others have, one of the largest off-ramp networks in the world. We don't need to rely solely on end-to-end customer adoption through third-party wallets. We already have the rails, the payout network and the trust to make USDPT liquid and available to our customers.

Many have asked why are we launching our own coin instead of someone else's. There are several key reasons why we believe this is the right approach with a few worth noting. First, we have a natural advantage through our reach to supply stable coins to create liquidity in geographies where remittance represents a significant portion of GDP. This allows us to better capture economics by earning float for the long term. Additionally, this choice provides us with full control over the stablecoin design and definition of how it's issued, redeemed and circulated, ensuring regulatory compliance in an evolving global landscape.

Ultimately, if you envision a future world where all payments are tokenized, we want to have the added control and flexibility. Use and utility is key to our continued success. USDPT is no different. So we are partnering with Rain to launch a USDPT stable card, a Visa-backed secured card, both in digital form for instant use and physical form for everyday use, all delivered through a simple mobile-based utility for customers. Stable card is the fastest way to put USDPT to work in everyday spend, and it creates a direct flywheel back into our digital asset network, cash in, cash out and hold all through Western Union.

Western Union is not chasing a trend. We are shaping the next era of global money movement. And with our digital asset network, we give hundreds of wallets, instant access to our global cash network. With our payment token, we will launch a stablecoin that can scale faster because we own the off-ramp. And with our stable card, we will turn that liquidity into everyday utility. Western Union has the unique combination of distribution, compliance and brand trust. We can bridge on-chain finance to real-world fiat at a global scale. We have been sending money globally for over 100 years. With USDPT, Western Union is building the future of money.

So let's bring it back to the 3 parts of the story. First, we're building one of the best payments networks in the world, and we've already made great strides. We now have over 300 real-time payout options in more than 140 countries, and we're continuing to expand wallet, card and bank connections. Second, that network is the engine in the middle between senders and receivers that actually moves the money. It's not just infrastructure. It's an asset unto itself. It powers our business, drives conversion, lowers cost and enables us to serve customers better than anyone else.

And third, we're creating new value from that network, diving into the future of how money will move. With our unique combination of distribution, compliance and brand trust, we're building the next chapter of global money movement from stablecoin to everyday spend. This is Western Union's next-generation payments network, and it will fuel how we go beyond.

Thank you for your attention. And I would now like to hand it over to Matt Cagwin, our CFO.

Thank you, Ben, and good afternoon, everyone. For those that I haven't had a chance to meet, I'm Matt Cagwin, the CFO here at Western Union. It's hard to believe it's already been 3 years since our last Investor Day. As Devin has already highlighted, over the past 3 years, we've evolved from an organization that was a shared owner and largely a single product company to a much stronger and diversified organization today. We've been focused on making the critical changes needed to set up Western Union for sustainable, profitable revenue growth as we enter this new exciting chapter of Beyond. As you've heard from my colleagues, we're moving beyond cash, beyond retail remittances, beyond a single product company.

Over the next 20 minutes, I'm going to walk you through 4 things. First, I'm going to give you a recap of our performance over the last few years. Next, I'm going to walk you through the fundamentals of our business and how they tie directly to the strategic direction. Then I will share our outlook for the medium term, and then I'll end it with our approach to capital allocation. When I'm done, I'm confident that you will agree Western Union is positioned to drive strong returns.

At our last Investor Day, I laid out our Evolve 2025 financial outlook that in absolute terms has been achieved. However, how we achieved this wasn't a straight line. As I'm sure many of you remember, our Evolve outlook didn't expect positive revenue growth until this year due to the complexities of our transformation. However, we got there much quicker than we originally anticipated due to contributions from Iraq, which have reverted back to normalized levels over the past 5 quarters. As I stand here today, the key difference between where we wanted to be and where we are is our 2025 revenue outlook or revenue exit rate.

Originally, we anticipated revenue would be trending to 2% growth, which has been negatively impacted by the macros in the Americas, especially on our retail side and U.S. the lack of quarters in particular. With that said, I'm still proud of our progress and the stronger foundation that we have today. Given the stronger base and the strategies we've discussed today, we are poised to substantially increase our revenue and EPS over the next 3 years.

From my seat, there are many financial accomplishments that I'm proud of. I would like to start off with our progress on adjusted revenue. We've been able to accelerate our revenue during the first 9 months of this year by 400 basis points compared to 2022. You may be wondering how we drove this. Well, we've been able to accelerate our branded digital business that was shrinking adjusted revenue and transactions 5% and 1%, respectively, in the third quarter of 2022 to a business that has consistently grown revenue and transactions over the past 2 years, with the third quarter of this year, growing adjusted revenue and transactions 6% and 12%, respectively.

We've also drove an 80% increase in Consumer Services revenue over the past 3 years, which is amazing considering why I stood here 3 years ago, consumer services was about 6% of revenue and known as other. Now Consumer Services is 15% of revenue and on track to complete its fourth consecutive year of double-digit revenue growth. As Sofia just highlighted, this has been accomplished through expanding our product base, improving our legacy platforms. While this is a strong improvement, we believe there's meaningful runway to accelerate revenue growth further.

Next, I'd like to discuss our cost redeployment program. As you may remember, we launched this program to free up capital to improve our product offering, improve our platforms, strengthen our talent base and achieve our margin outlook. As I foreshadowed 3 years ago, we have evolved Western Union into a more metrics-driven organization. We've implemented a continuous improvement program, which has enabled us to wrap up our $150 million cost redeployment program 2 years ahead of schedule.

As I've mentioned previously, we are not done, and I look forward to sharing more about our cost redeployment program soon. And the last item I'd like to highlight is our capital return to our owners. Over the past 3 years, we've remained shareholder-friendly by returning $1.8 billion through dividends and share buyback. This was enabled by our strong cash flow conversion. I look forward to sharing more about our capital allocation plan later in my presentation.

Let's now take a look at the cross-border remittance trends. International money transfer continues to see healthy demand globally, particularly outside the U.S. and is expected to grow for the foreseeable future. The outlook I will share in a few minutes is grounded on the expectation that remittances are resilient and will grow 3% to 4% per year. It is also important to note that we believe that we can grow our share based on the strategies we've discussed earlier today, including focusing on high-growth corridors in underpenetrated markets.

Let's now dive into our CMT business. Looking back over the past 3 years, we've grown our CMT business by 6%. The way we grow transactions is a bit more nuanced. It's about how many customers we serve and about how frequently those customers transact. Let me use our brand digital business as an example to explain this. In the last 3 years, we've seen about a 25% increase in branded digital customers. We've also deepened our engagement by offering more competitive rates and enhance our service levels. As a result, transactions per customer have climbed by about 10%. The combination of these 2 factors has resulted in a 35% increase in branded digital transactions.

Over the same period, our overall CMT revenue per transaction has declined by about 15%. This decline is driven primarily by deliberate price reductions, growth in branded digital, the rising share of our account payout transactions and the growth of our independent channel. We recognize that many of our customers are price sensitive. Prior to 2022, our pricing was above market. And over the past 3 years, we have systematically tested and adjusted our pricing to better align with market conditions, aiming to boost lifetime value per customer. The cumulative pricing impact of these actions is about $450 million.

The good news is the market has stayed relatively stable over the last 3 years. And based on the progress we've made to become market competitive, we don't expect any significant price reductions going forward. However, the other contributors are much more structural, ongoing variables that will continue to have an impact on our business. As an example, branded digital and account payout transactions come at lower RPTs than the company average transactions. However, we believe that they contribute to higher lifetime values. Based on the progress to become more market competitive in the current market conditions, we expect the gap between revenue and transactions to narrow and stabilize around 3%.

Now let's shift gears and discuss our approach to our expense base. Over the past 3 years, we've successfully streamlined more than $150 million in costs, achieving this milestone 2 years ahead of schedule. This accomplishment was supported by operational efficiency gains, including improvements in our call centers, consolidation of our tech vendors, marketing efficiency, cloud migration, organization redesign and optimizing our corporate real estate footprint. But we're not stopping there. We continue to see opportunity to drive further efficiency across our business.

Looking ahead, we're targeting an additional $150 million in incremental efficiencies over the next 5 years. The biggest difference between how we drove the savings over the past 3 years and those included in our Beyond outlook is the importance of generative AI. As you heard Devin mentioned earlier, we're already seeing real impacts from generative AI on customer service, marketing language translations, programming efficiency and our risk decisioning.

Through generative AI, our metrics-driven management approach and continuous improvement culture, we expect to save $150 million over the next 5 years, through reductions in areas such as account payout costs, fraud losses, further productivity improvements in our call centers, technology platform rationalization and back-office operations as well as cost synergies associated with the Intermex acquisition. The $150 million in cost efficiencies that we achieved will allow us to reinvest resources into the exciting organic growth strategies, you heard about earlier today, as well as support our EPS outlook.

Now let's take a look at what you heard and put a little bit more into context on the performance. Starting with digital, the secular shift is continuing, and we are well positioned to capitalize on the trends. As you heard from Bob, we have seen a 100% increase in account payout transactions since 2022. Our retail network and brand recognition give us a distinct advantage in acquiring customers at less than $20, which enables us to sustainably grow. This can be seen in the 12 quarters of strong branded digital transaction growth.

As Bob also mentioned, we're continuing to make significant investments in our capabilities. As you may have seen from the demo upfront, our new digital platform enhances the connection between millions of our customers globally while creating new opportunities to engage both senders and receivers through a single platform that brings together our CMT business and our Consumer Services offerings. Our growth strategy is rooted in 3 components that Bob walked through earlier, underpenetrated corridors, country expansion and high-growth customer segments. Based on the strategies you've heard from Bob, we expect revenue to accelerate and over the next 3 years, reach $1.4 billion to $1.5 billion in revenue in 2028.

Now on to retail. Our customers typically begin their relationship with us in the retail market, which continues to be relevant and highly important channel, and we believe will continue into the future. Our retail network is a strategic asset, which is a bridge between the digital platform and consumer products. I know most of the people view retail remittances as a cash-based business and some probably wonder about its future. We believe that retail is becoming a human-assisted digitally enabled transaction channel.

As you heard from Giovanni, we've seen retail to account payouts grow by about 100% since 2022. We've also seen debit-funded send transactions reach 12% penetration in our retail channel for retail transactions in Europe. This growth highlights the increasing customer demand for using digital payment methods to send and receive remittances while valuing the personal touch of a retail experience, human-assisted digitally enabled.

As Max highlighted, we're seeing strong performance and gaining market share in Europe as a result of our new operating model. We are also excited about the recently announced Intermex acquisition, which will significantly expand our retail footprint in the United States and improve the customer access across the Americas. We believe the combination of this acquisition, along with our new operating model will help us to accelerate the stabilization of North America. Based on the strategy that Giovanni and Max walked us through, we expect retail revenue in 2028 to be in the range of $2.1 billion to $2.2 billion, excluding Intermex.

As Sofia mentioned, consumer services is how Western Union goes beyond, beyond remittances and provides customers with a suite of products that serve financial needs. Consumer services are a particularly exciting area. Let me highlight a few of the reasons why it's exciting to me. First, our consumer service business is an area that we've made a significant amount of investment over the past few years, and we're seeing it pay off in double-digit revenue growth for the fourth consecutive year. Second, consumer service products generally generate more than our company average margins. Third, there's product and country expansion opportunities, which give us a long runway to accelerate growth. And fourth, Consumer Services will benefit from our Stablecoin innovations with solutions like Stablecard.

Based on the strategy Sofia walked you through and our current strong trajectory, we expect Consumer Services revenue to be between $800 million and $1 billion in 2028. As you can see, when putting all the pieces side by side, including the Intermex acquisition, it creates a compelling yet achievable outlook for the next 3 years. We believe that we can grow revenue to $4.8 billion to $5.3 billion in 2028. This is underpinned by the improvements we've made over the past 3 years and the strategies we are implementing as part of Beyond.

When we met 3 years ago, we set out an aspiration to diversify Western Union into faster-growing businesses. As I just mentioned, we've invested heavily to grow and expand our consumer services products and improve our branded digital customer experience. This focus has enabled us to shift the portion of our revenue that is generated from retail remittances to 60% today.

Looking forward, we expect this trend to continue with consumer services and branded digital remittances reaching close to 50% of our overall business in 2028. And yes, this expectation does include the acquisition of Intermex.

Speaking of Intermex, let me explain a little bit about why we're so excited about this acquisition. As I briefly mentioned earlier, with this acquisition, we expect to accelerate the transformation of our North America retail business. Intermex's go-to-market strategy is very similar to our approach in Europe and in some instances, better tailored for the nuance of the U.S. market. Their retail business has demonstrated success, doubling both principal and revenue over the past 5 years. We are also excited by the prospects of gaining a proven management team and strong operating model.

Their sales and support organization, 10,000 strategically located U.S. agents, robust suite of consumer products are unique and valuable assets that they've built over the past couple of decades. We also plan to accelerate and scale Intermex's early digital success, as Devin talked about earlier.

As the U.S. and LACA customer base continues to digitize, we see a significant opportunity to capitalize the strength of the Intermex brand and its 6 million customers using our next-generation digital platform and capabilities.

From a financial standpoint, due to market dislocations, we were able to acquire this amazing asset for around 5x EBITDA and expect around $30 million in synergies over the first 2 years. Intermex is expected to be accretive and generate $0.10 of EPS in the first full calendar year post close.

So based on what I've laid out, we anticipate reaching $5 billion of revenue in 2028. Yes, this is a 20% increase over today. This growth will be fueled by the acquisition of Intermex, double-digit growth in consumer services, strong growth in branded digital as we continue to diversify away from being a retail cash rents player, while at the same time, improving our retail mint performance. And we expect adjusted revenue per share to reach $2.30 by 2028, representing a 30% increase over 2025, supported by the strong revenue growth, operational efficiencies and lower share count.

We expect these results, along with our strong cash flow conversion to enable us to generate $1.7 billion in free cash flow over the next 3 years. And with the stronger foundation that we've built over the past 3 years, we are confident about the next 3 years and see a clear path to achieve and potentially exceed our outlook I just provided, with further potential upside from increased digital adoption, further acquisitions and cost optimization, all while remaining committed to maintaining above industry margins.

I know many of you are eager to ask me about 2026. I know it will be the first five questions. But as normal, we will be providing our 2026 guidance in connection with our year-end earnings release in February.

Now I'd like to pivot to our capital allocation strategy, which has historically been one of Western Union's strengths. We're known for maintaining a strong balance sheet, generating robust free cash flow, consistently returning capital to our owners. When we talk about our capital allocation strategy, we have two principal sources of capital, our exceptional ability to generate free cash flow and our strong balance sheet.

Our business model is a true cash flow engine. Over the past 3 years, adjusted free cash flow conversion has been about 100%. Thanks to the strength in just the past 3 years, we've returned about 60% of our current market capitalization to our owners through dividends and share buyback. As I mentioned previously, we expect to generate more than $1.7 billion in free cash flow over the next 3 years. For our owners, this would mean close to a 20% annual cash-on-cash return.

When you think about our balance sheet, we're proud of our investment-grade credit rating that we've maintained since the spin-off from First Aid in 2006. That's been possible because of our strong cash flow, careful management of our debt and thoughtful debt profile. We've consistently aimed for a debt-to-EBITDA ratio of 2.5x to 3x. And while maintaining -- and while the Intermex acquisition will temporarily push us above this target for the next 12 to 18 months post close, we're confident that the added EBITDA and cash flow from Intermex will bring us back in line quickly.

This financial strength gives us the flexibility to go after acquisitions and new growth opportunities while helping to diversify and accelerate revenue.

Over the past 3 years, we've reignited our M&A strategy, signing multiple deals with five of those already closed. Most of these deals have been small tuck-ins, but intended to accelerate our transformation.

Our M&A activity is designed to fuel growth in several ways. First, expanding our customer base. The Intermex transaction will give Western Union access to more than 6 million new customers. As Bob highlighted, these customers can migrate to our new digital platform and help accelerate our digital strategy. Second, growing our addressable market. Acquisitions like EuroChange expand revenue opportunities by giving us access to new market segments. And third, accelerating speed to market by acquiring critical platforms and assets such as our digital wallet in Mexico, helping us to move faster and deliver innovative solutions for our customers.

Looking ahead, we plan to continue to pursue strategic M&A opportunities aligned with these themes, supporting ongoing revenue and enhancing shareholder value. It is an honor to serve as the CFO of this iconic storied company that time and time again has reinvented itself. I'm confident that we're stronger -- we have a stronger foundation today than we did 3 years ago. In our strategic direction you've heard today, Western Union is placed again to reinvent itself.

Personally, I'm excited about what lies ahead, and I believe that we're poised to deliver exceptional returns for our owners, growing revenue 20% to $5 billion, growing adjusted EPS 30% to $2.30, generating free cash flow by $1.7 billion and continuing to diversify beyond retail remittances. Thank you for your time. Now I'd like to hand it back over to Devin.

Thank you, Matt. Now that was beyond what I could have possibly have hoped for today despite the people leaving. Beyond is not a destination. It is a strategy to take our company to the next level. Today, you have heard from our management team how we return this company to both top and bottom line growth, reaching $5 billion of revenue by 2028.

We will continue to accelerate our core money transfer business while expanding our consumer services products across geographies and channels. We will also take the lead in the transition to a digital asset-based money movement system, positioning ourselves as an integral player in the emerging Stablecoin-based economy.

I hope you have also learned about the foundational building blocks that we have been laying over the past 3 years that will take us beyond what we have been able to achieve to date. The delivery of a great digital-first, market competitive and customer-centric experience across all of our channels and all of our geographies is what our great brand really deserves.

Our business model is unique. We are the largest retail remittance company in the world and one of the top 2 digital players. Over the past few years, we have been honing the formula that will deliver stability in retail while cost effectively growing our digital business. We have also been expanding our ability to cross-sell and upsell to the 100 million-plus customers that we have the privilege to serve every day. Our scale, our resources and our geographic reach is what will enable us to deliver the Beyond strategy and return this great company to growth.

Another critical element that you just heard from Matt is our cash generation potential. As Matt shared, $1.7 billion over the next 3 years. At current market levels, the power of share buyback on now our stable and growing operating earnings is meaningful. We've also been increasing our ability to deploy capital inorganically in a manner that can further compound that operating income growth.

I would like to thank our management team, our Board, many of whom are here today, and the nearly 16,000 colleagues who work every single day to deliver for our customers and are, in fact, the linchpin of us achieving our Beyond ambitions. Thank you for your time and your attention over the last 2.5 hours. And we will now take any questions that you might have. And know Matt won't give guidance for the next year until February. All right.

All right. Let's get started. Will they bring the chairs up? Kartik, you have the mic.

Tom, thank you. Matt, I don't want to disappoint you. So I want to ask about 2026 in a different way.

Yes, we've assumed Intermex midyear.

There you go. So I think as part of your long-range or 2028 projections, you said money transfer market growing 3% to 4%. But it seems like in 2026, there's a lot of uncertainty, uncertainty around immigration and uncertainty around the economy plus this remittance tax. So is 2026 a year that could be different than what you expect '27 and '28 to be from a market growth standpoint?

I'm not ready prepared to talk about it. I mean we've been making trajectory improvements. You saw on our last call, we talked about the fact that we have now been stable in the U.S. for a couple of quarters in a row. So you start to get to lap that macros that we've encountered. We expect to see improvements, but it's early days and not prepared to give exact impacts. There is some uncertainty, as you know, and everybody in the room knows around what remittance tax will do. I'll share what you and I briefly talked about in front out there.

We see it as an opportunity as well as it has a little bit of a risk, but the opportunity is it can actually get customers that need other solutions we have. Sofia talked earlier about our prepaid cards, our Vigo wallet here in the U.S. Those are tools that people can actually avoid the remittance tax, and we have the ability to monetize that more. You can have a situation where they go to Bob's world and that could have an RPT impact or they can go to Sophia's prepaid world and we can make revenue twice. So it's very early days to know exactly what -- how it's going to pan out in the first quarter, but I'm looking at it more from an optimistic standpoint. I don't know if anything you want to add.

So maybe, Devin, just one follow-up. You talked about $1.6 billion in free cash flow, the opportunity to be buying back stock. If you look over the last 5, 6, 7 years, as long as I've followed the company for a long time, there's always been a lot of buyback, but the stock hasn't trended, right? And you could make a case that maybe that free cash flow should have been invested in other things. So kind of as you look at the outlook for this company, do you think it's better to use that cash to buy back stock or go out and try to acquire and maybe change the growth trajectory of the company?

So we have been doing both now. As I highlighted, we've reignited the acquisition engine. Like anything, you can't go from stop to start and hope you're going to win the race. And so we've been honing the capabilities and skills to buy companies, integrate them successfully and help drive the overall business.

So as Matt said, we've done half a dozen plus deals. That is the foundation upon which when the right deals come, and we are very disciplined, as we've evidenced, in terms of making sure that we do deals that add value from a shareholder standpoint relative to the alternative, which right now at whatever we are, $9.50 is pretty attractive. We see a much brighter future than the markets do. And so buying back stock is particularly on a growing operating income basis, should be really accretive for us.

Tien-Tsin?

Good update. I learned a lot. Just thinking about opening up the payment network, that's something that's been discussed at Western Union for a while and thinking about the digital asset opportunity and the positioning and being the ramp there makes a ton of sense.

But my curious is just putting the guardrails in place to make sure that you're investing in that properly from a timing perspective and when that might translate? How have you thought about that in the framework of through 2028 and maybe even Beyond? Because it feels like you can go in pretty hard and it might be too early, and we've seen that before with Western Union or some of your peers in the past. So how have you thought about that? And I have a follow-up.

So I think, Tien-Tsin, the -- and Ben talked a lot about this. A lot of what we're doing, particularly in the payment network is really to support our own business. So we moved all of the processing to the cloud. We're really focusing on building out the funds in and the funds out to be localized, to be real time, to be highly compliant. And we're doing it in a technology architecture that makes it more efficient and effective for us. All of those things, we're going to do regardless.

Now the added benefit is as we've gone through the transformation, Ben and the technology team have built it in a way that if we want, which, by the way, was not historically true, we can open it up. The API architecture, the ability for people to plug into it is far more seamless now than it ever was. But the core of what we're building is really to support our own business. It really is to support what you heard from Sofia, what you heard from Bob and what you heard from Giovanni. And we think that, that real-time payments network, the ability to fund across geographies, across payment types and to pay out in real time is a strategic asset for us. And if there is market demand, we're going to take advantage of it. But you didn't see us come up here and say, "Hey, we see $1 billion of revenue from opening it up". What we said is we're building a strategic asset that has utility Beyond and we're going to see what that looks like.

Yes. I get it. From a utility perspective, that makes sense. Maybe just my follow-up, probably more for Matt, just thinking about consumer services and I appreciate the margins are higher than the remittance business, but it's got some network elements to it. network economics are very strong, some processing elements, even some fintech or neobanking characteristics that have pretty high incremental margins in general. So how much of a needle mover to the EPS do you see consumer services? Or am I way off in thinking about the contribution margins from some of the things that you're investing in?

Yes, you're not way off. I mean, so as Sofia talked about, we see a way to go double our consumer services business over the next 3 years, going from $500 million to $1 billion. Today, it has margins in the mid-20s. So that part, you can kind of put there. We're going to innovate some other things. But when you break it up, you've got margin value from our bill pay business. That has a very variable cost nature of moves. Our money order business moves around a little bit with float. Our travel money business is additive to our agent locations and has very low cost if the location is being added to existing businesses, so that will be scalable. So I think when you look at it, the answer is, yes, it should scale, but it would not go all of a sudden from 100% fall through to that $500 million. You should think about it as pulling the margins up over time.

Just a follow-up to Tien-Tsin's question. If you think about the margin profile of your business today and kind of how it will evolve through 2028?

Yes. So we intentionally did not give guidance this time on margin. I'll be very transparent about that. We have a lot of moving parts. We're making investments and decisions. What we're really committed to is growing the revenue and growing our EPS. There could be times trade-offs between above the line and below the line on operating income.

But we do expect to continue to accelerate. You can see in our EPS, which has been flat, as Devin talked about for 3 years. Part of that was the acceleration from 2023 went way faster than we thought to Iraq. So we're closer to a 9% growth rate, where we've built into this model is closer to that for every year. And that's really just us driving top line with good fall-through.

But I think importantly also is philosophically, we view ourselves as a margin-generating business. So unlike other payments or fintechs, we are a business that produces operating profit and net income. Matt and the team do a great job of managing our tax liabilities. And so we're not going to move away from focusing on generating profitable operating growth for the company through good times, bad times, investment cycles, not. That is deep in our DNA.

Any further questions? There is wine waiting. If not, thank you for coming. There is a cocktails and orders in the lobby. Look forward to mingling and chatting with you about our Beyond strategy.

Thank you.

Good day, and welcome to the Western Union Third Quarter 2025 Results Conference Call. [Operator Instructions] 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 third quarter 2025 results, 2025 outlook, 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 2024 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 Third Quarter 2025 Financial Results Conference Call. Today, we reported a solid quarter against a difficult macro backdrop, demonstrating the benefits of our large-scale global and now multiproduct business model. We saw strong performance in many corridors and product categories, offset by continued weakness in North America across several specific large corridors, most notably U.S. to Mexico. While we are on our way to becoming a much more customer-centric company, we have invested significantly in becoming market competitive and have increased our executional and operational rigor. We are now delivering an improved omnichannel customer experience across our products and channels.

As a result, in this quarter, we saw reasonable to strong performance in Europe, South America and Asia, driven by our retail business in Europe, our digital business in Asia and our consumer services business in Europe and LACA. Our opportunity is to continue to drive our strategy across all geographies and channels and see the benefits as market conditions improve. An important element of the strategy has been to accelerate the development of our retail model in the U.S. Our goal is to have a strong base of strategic accounts, a large and competitive mix composed of exclusive and nonexclusive agents -- independent agents in the middle and a small selection of high-performing company-owned stores at the top. Upon completion, our recently announced acquisition of Intermex will help accelerate our progress towards this goal. With the passing of the HSR review period 2 weeks ago, we are now excited to begin the appropriate integration planning with Earnestness. We remain optimistic about the longer-term outlook for our business as we expect migration patterns to stabilize and our investment in becoming market competitive over the past 2 years has provided a foundation for ongoing revenue and share gains. We also see many opportunities to continue to expand our consumer services business, which contributed significantly to the company's results in the quarter.

Over the past 3 years, we have delivered above-average industry margins and returned substantial capital to our shareholders via dividend and share buyback. We have and will continue to fund the necessary investments in our transformation through cost discipline and good operational performance management. For the third quarter, we reported revenue at [ $1.033 billion ]. On an adjusted basis and excluding the impacts from Iraq, this was a decline of 1% year-over-year. Consumer money transfer transaction growth was down 2.5% in the quarter, excluding Iraq, and cross-border principal growth was up mid-single digits on a constant currency basis, speaking to the resilience of our customer base and their perseverance in the current macro environment. While our retail business in the Americas continues to face headwinds associated with the current geopolitical environment, we are encouraged by some improving trends in recent months. And while it is too early to say that we have reached the bottom, we are potentially seeing some stabilization.

Our strategy continues to perform well with our retail business in Europe with mid-single-digit transaction and revenue growth. Our branded digital business increased transactions by 12% and adjusted revenue by 6% in the quarter. Consumer Services adjusted revenue was up 49% in the quarter, driven by our acquisition of Euro Change and a strong European travel quarter, which is the driver of our travel money business. I was in London last week with our new team discussing our plans for 2026, and we remain excited about the potential for expanding that business across both retail and digital channels. We expect Consumer Services to have another strong quarter to the end of the year, and our travel money business is likely to approach $150 million in revenue in 2026, up from nearly nothing just a few years ago. Adjusted earnings per share came in at $0.47 compared to $0.46 this quarter a year ago.

Our discipline in managing operating costs continues to come through. Matt will discuss our third quarter results and 2025 outlook in more detail later in the call. Switching now briefly to the macro environment. Economic conditions globally remain reasonable with inflation rates declining in key markets around the world and GDP outlooks remaining relatively strong despite elevated interest rates. These economic conditions are providing a stable backdrop for our business and should improve further as we have begun an interest rate cutting cycle, both here in the United States and in Europe.

Globally, migration continues to evolve in complex and dynamic ways. Our business remains fundamentally linked to human mobility. When people move, they rely on Western Union to send money home. This connection makes our business sensitive to shifts in migration patterns policies and enforcement practices. The good news is that our business is globally diversified across countries and channels, mitigating much of any one region's specific risk. When we see trends towards more restrictive migration policies, like we are seeing in the United States now, it does influence our business. Recent policy changes have led to a substantial decline in border crossings and an increase in enforcement actions, including workplace inspections and deportations which have created uncertainty and hesitation within migrant communities.

These developments continue to impact customer behavior with some customers reducing transaction frequency or shifting to other channels. That said, the U.S. is not monolithic. And in the quarter, we saw transaction growth that was positive to places like Brazil, India, [ Hadi ], Panama and Vietnam, flat to slightly negative in important corridors like the Philippines, Jamaica, Guatemala and Colombia, offset by significant declines to Mexico, El Salvador, Peru and Ecuador. The U.S. to Mexico corridor is the most important to monitor going forward to which we have begun to see some recent improvements from the lows in June. The Bank of Mexico data would also indicate some improvements with the most recent month down 8%, improving materially from the June lows.

In other instances, we see beneficial new patterns emerging from the macro changes, such as strong growth in outbound remittances in Argentina and growth in corridors like Canada to India in Singapore to Indonesia. Despite these short-term headwinds, we believe the long-term trajectory remains clear. Global migration is not disappearing. It is adapting. People will continue to move in search of opportunity, education and family and Western Union will continue to stand with them, providing trusted, compliant and accessible financial services. Looking ahead, our role is clear. We will support the evolving needs of senders and receivers with a broad base of solutions that are fast, secure and built on trust. Our 100 million plus customers around the world are a resilient force, and so are we. Over the last several years, we have frequently spoken about our desire to make Western Union a more digital company and to expand our product set to meet the needs of our customers as they evolve.

We also see our strong brand recognition and the large base of existing customers as key building blocks to cost effectively build our digital business without having to invest hundreds of millions of dollars in non-scalable marketing. In advance of our Investor Day in a couple of weeks, I want to take a moment to highlight the significant progress we've made in becoming a more digital-centric company. Our transformation is not just about technology. It's about reimagining how we serve our customers, deepening relationship and unlocking new areas of growth. Over the past several quarters, we've accelerated the shift towards digital channels. Our branded digital business has now delivered 8 consecutive quarters of mid-single-digit or better revenue growth with strong transaction momentum in key regions like the Middle East and APAC. Our digital business now accounts for over 40% of the principal we move around the world. We are also seeing a continued expansion in our payout to account capabilities, which now represent over half the principal we send through our digital business.

Our expansion of card acceptance and digital funding options across both our retail and digital channels is another example of how we're becoming a more digital company. Today, over 55% of all of our money transactions are digital. Our global digital payment network is a fundamental asset that we will continue to lever and grow as a foundation for future expansion and growth. We have been making progress on our digital wallet strategy. We are now live in 7 countries, having launched Brazil in the first quarter and the U.S. in the second. We have onboarded over 0.5 million customers and now have a growing number of active and loyal monthly users. We see real benefits in capturing payouts in our wallets with Argentina now approaching 15% of all inflows and Brazil after less than a year of launch -- post-launch nearing 5%, saving us on commissions and enabling a better and more digital received customer experience.

We anticipate change of control regulatory approval in Mexico before the end of the year and have received a license for a digital wallet offering in Australia with an anticipated Q1 launch of 2026. We envision our future as a broad-based 2-sided payment network with digital wallet options on both sides in all of our major markets. We also anticipate being able to facilitate both traditional and digital asset transfers for our customers and potentially others as well. But digital is more than a channel. It is a platform for innovation. This includes our new point-of-sale system, which is now nearly ubiquitous around the world and allows our retail network to connect digitally to all of our account and wallet payout points globally. Executing the rollout of a new point-of-sale system in under 12 months is something that we would not have been able to do just a few years ago. And is a true testament to the progress we are making on the technology front.

With this new platform fully implemented in the U.S., we are continuing to make progress in meeting the needs of our customers with digital payment options. When the new U.S. 1% remittance tax on cash transfers goes into effect in January, we will be well positioned. Looking ahead, our strategy is clear. We will continue to modernize the movement of money, expand our product suite and deliver trusted compliant financial services to our global customer base. We are building a platform that is resilient, scalable and ready for the future, and we look forward to discussing this with you more in detail at our Investor Day in just a couple of weeks.

To capitalize on our strong brand, trusted customer relationships and omnichannel platform, we have been enhancing our product suite with new or revamped products that our customers want and value. We have made significant progress in this effort within what is now our Consumer Services segment. Over the last 2 years, we've invested in our existing product offering to improve functionality and value and added new products like Travel Money, prepaid cards, digital wallets in our out-of-home advertising business. Today, Consumer Services now accounts for roughly 15% of total company revenues, which is up 70% or over $200 million in just the last 2 years. That incremental $200 million is about 5 percentage points of additional revenue growth for the company. Travel Money, which has been a big driver and which we believe will account for roughly $150 million of revenue in 2026 is up from almost nothing in 2023.

We believe there is a much longer runway to finding unique and interesting ways to monetize our highly differentiated asset base, including our 100 million-plus customers, our growing portfolio of well-recognized and trusted brands our global reach and scale and our digital payments network. More recently, we have seen an opportunity to accelerate our development and use of digital assets. The work we have been doing to modernize our technology stack, invest in digital payments network and roll out digital wallets around the world are all foundational enablers that will help us accelerate a digital asset strategy. Historically, Western Union has taken a cautious stance towards crypto driven by concerns around volatility, regulatory uncertainty, and customer protection.

However, with the passage of the Genius Act, we are now seeing potentially interesting opportunities to integrate digital assets into our business in ways that enhance efficiency reduce friction and improve customer experience. We are actively testing stable coin enabled solutions in our treasury operations. These pilots are focused on leveraging on change settlement rails to reduce dependency on legacy correspondent banking systems, shortened settlement windows and improve capital efficiency. We see significant opportunities for us to be able to move money faster with greater transparency and at lower cost without compromising compliance or customer trust. Beyond treasury, we are exploring how our global payments network can serve as an on-ramp and an off-ramp between Fiat and digital currencies. We are seeing strong interest from potential -- potential digital native partners using our infrastructure to bridge these worlds, particularly in regions where access to traditional banking is limited, but crypto adoption is growing.

Finally, we are expanding our partnerships and capabilities to allow customers to move and hold stable coin digital assets. This is not about speculation. It is about giving our customers more choice and control in how they manage and move their money. In many parts of the world, being able to hold a U.S. dollar-denominated asset has real value as inflation and currency devaluation can rapidly erode an individual's purchasing power. These innovations align closely with our broader strategy to modernize the movement of money. They complement our investments in digital channels, pay out to account capabilities and next-generation platforms like our digital wallets. Together, they position Western Union to lead in a future where digital assets could play a growing role in global finance. We look forward to sharing more with you at our Investor Day in a couple of weeks.

In closing, I want to reiterate our confidence in the path we are on. Western Union is transforming. We are becoming more digital, more agile and more aligned with the evolving needs of our global customer base. We are expanding our product suite, modernizing our platforms and unlocking new opportunities for growth across all of our channels. This transformation is not just about technology. It's about building a resilient, scalable business that delivers trusted financial services in a rapidly changing world, whether it's through faster account directed payments, expanded digital wallet capabilities or innovative digital asset enabled solutions, we are positioning Western Union to lead in the future of cross-border money movement.

We remain focused, disciplined and optimistic, our strategy is working, our execution is accelerating, and our platform is stronger than ever. I look forward to sharing more with you at our upcoming Investor Day in continuing this journey with all of you.

Thank you. I would now like to turn the call over to Matt Cagwin, our Chief Financial Officer.

Thank you, Devin, and good afternoon, everyone. I'm delighted to be here today to walk you through our third quarter results as well as our 2025 financial outlook. In the third quarter, GAAP revenue was [ $1.033 billion ] and consistent with our expectations, our adjusted revenue, excluding Iraq, was down 1%, driven by growth in Consumer Services and branded digital offset by our retail business. Our industry-leading adjusted operating margins was 20% in the quarter, up from 19% in the prior year period. Our adjusted operating margins primarily benefited from the continued cost discipline that we've -- as we've now completed our cost redeployment program 2 years ahead of schedule. .

Adjusted EPS was better than our expectations at $0.47 in the current period compared to $0.46 in the prior year. Adjusted EPS benefited from our cost management discipline as well as fewer shares outstanding, primarily offset by higher interest expense and higher adjusted tax rate. Our adjusted effective tax rate was 12% in the quarter, up from 8% in the prior year period. The adjusted effective tax rate was higher due to discrete benefits in the prior year period. Consumer Services adjusted revenue was up 49% in the third quarter, driven by our Travel Money business, and strength in our bill pay business. The Consumer Services segment has accelerated since the first quarter due to the acquisition of Euro change. Our Travel Money business drove about half of our growth this quarter. Organically, consumer services continue to grow double digit. And as expected, consumer service margins have improved 1,300 basis points to 22% in the third quarter as our new product sets began to scale.

As Devin mentioned, we've made meaningful progress expanding the products and services we offer, and we believe there's meaningful runway ahead. Travel Money is a great example. It is now $100 million of revenue and on its way to $150 million next year from close to nothing just a few years ago. We believe there are many other potential opportunities to serve our 100 million-plus customers and look forward to sharing those as ideas developed and get launched. Now turning to our consumer money transfer or CMT business. Transactions declined 3% in the quarter or 2% excluding Iraq, U.S. immigration policies continue to disrupt our business, although the third quarter was not meaningfully different than what we saw in the second quarter. Customers continue to send fewer transactions but higher average principal per transaction. Our PPT increased roughly 6% in the third quarter compared to the prior year on a constant currency basis.

Our branded digital business grew adjusted revenue 6% and transactions by 12%. This marks the eighth straight quarter of solid revenue growth. It also marks a return of double-digit transaction growth driven by the Middle East, where we saw a meaningful acceleration of our business from partnerships that we announced in the second quarter this year. These partnerships are primarily focused on account-to-account transactions. Which has put pressure on the gap between revenue and transactions. However, we're super excited about these relationships because they expand our reach in the fast-growing Middle East. We also continue to see strong growth in our digitally initiated paid out to account business. In the quarter, principal grew over 40% and now accounts for over 50% of all principal sent from our branded digital business. We continue to expand our payout capabilities worldwide to meet the evolving needs of every customer segment. The rising demand of account directed payouts reflects our customers' desire for speed, flexibility and convenience. This shift provides a unique opportunity to deliver higher-quality service while building a long-lasting relationship with our customers.

Turning to our retail business. Overall, the performance has remained relatively consistent with the second quarter, with softness in North America, driven by the effects of immigration policies in mid-single-digit revenue growth in Europe. Now turning to cash -- now turning to our cash flow and balance sheet. We have generated over $400 million in operating cash flow year-to-date compared to $272 million in the prior year period. Included in this number is over $200 million in cash taxes paid this year related to the transition tax. We're excited about these obligations being behind us and look forward to the additional flexibility that we'll have to invest our free cash flow in support of our business or return to our owners.

Year-to-date, our CapEx was $101 million, up 10% year-over-year. I'd like to highlight that our CapEx will be up slightly this year versus prior trends. As this has been a large strategic agent renewal year as well as we've had an infrastructure refresh. We continue to maintain our strong balance sheet with cash and cash equivalents of roughly $1 billion and debt of $2.6 billion. Our leverage ratios remained at 2.6x and 1.7x on a gross and net basis, which we believe provides us ample flexibility to return capital or potential M&A while maintaining our investment-grade credit rating. In the third quarter, we returned over $120 million to our owners, via dividends and share repurchases and over $400 million during the first 9 months of this year. This represents a cash return to our owners of over 15% based on our current market cap. Through the first 9 months this year.

Now moving on to our 2025 outlook, which assumes no material changes in macroeconomic conditions. We are reaffirming our guidance today, which includes adjusted revenue to be in the range of [ $4.035 billion ] to [ $4.135 billion ]. However, based on our current trends, we anticipate adjusted revenue to be at the lower end of this range. This range reflects the continued benefit of our branded digital business. Double-digit growth in Consumer Services and a slight improvement in retail. I would also like to remind everyone that our consumer services -- consumer service business has different seasonality in our CMT business. Travel Money is seasonally higher in the second than third quarter. And I'd also like to remind everyone that we had a very strong media network business in the fourth quarter of last year due to higher media demands related to the U.S. presidential election. These comments are not meant to foreshadow consumer service growth being below our double-digit goal but rather to highlight it will probably not be at 49% next quarter.

We continue to expect adjusted operating margins to be in the range of 19% to 21%. And finally, we expect adjusted EPS to be in the range of $1.65 to $1.75. Based on our current trends, we expect adjusted EPS to be at the upper end of this range.

In conclusion, I want to emphasize the momentum that we're building across our business. Western Union is executing with discipline, clarity and delivering results while transforming for the future. Our strategic focus is on becoming a more digital-first company is yielding tangible outcomes. This is the eighth consecutive quarter of mid-single-digit branded digital revenue growth or better to also the rapid expansion of our payout to account capabilities. We're not just adapting to change. We're also leaning into it. Our Consumer Services segment is unlocking new revenue streams. Our operational efficiency program has exceeded expectations and our financial foundation remains strong, which gives us the flexibility to invest and innovation as well as returning capital to shareholders. I look forward to seeing many of you at our Investor Day on November 6, and thank you for joining today's call.

Operator, we're ready to take questions.

[Operator Instructions] Our first question comes to us from Tien-Tsin Huang from JPMorgan.

Good to catch up with all of you. Yes, no surprises. It sounds like -- and it sounded like you were encouraged by some of the recent trends in recent months in the retail and Americas segment that in your prepared remarks. Can you maybe elaborate on that? Was that just some of the Mexico statements you made in the recent months? Just wanted to get a little bit more detail on that.

Yes. Tien-Tsin, thanks. We are seeing the lows from the mid-summer have come back a bit, particularly in Mexico. But more or less across some of the important corridors. As highlighted in the prepared comments, we still see corridors that are growing and some important ones that are now approaching what I'll call stable or flat. So we remain positive that in the back half of the year, those trends will continue and the outlook will improve, but I would say things are still lumpy.

Okay. Good. I'll ask on Consumer Services quickly. Just Travel Money. You mentioned a few times that will probably grow 50% next year. Just curious on the visibility there and the incremental margins on that business, just to highlight it because it is a bigger contributor?

So our expansion next year is we'll have one more quarter of the grow over from Eurochange. We're pushing into other new markets based on now, we've got a good scale. We've got a management team that's very competent. As Devin talked about, we were in Europe last week, and we actually spent most of the week with the management team there and came away very impressed by their quality of the stores, the strength of the management team and their vision for how we can continue to expand both same-store sales as well as across new footprints. And the last little fun fact for you. When we did the acquisition, we had talked probably 2 quarters ago that we bought it for a little under times. Now having owned it for a couple of quarters, they're meaningfully above our models that we had done and on track to have a great return for us.

Our next question comes to us from Darrin Peller from Wolfe Research. .

See the profitability. We see -- but I wouldn't -- or were use penetration [indiscernible]

Darrin?

Yes, can you hear me?

Your mic is really, really hard.

I think you might be better now. Try it again.

Just the same reason of penetration.

Darren, you got a bad connection, maybe try coming back in, and we'll put you back in the queue.

Our next question comes to us from Will Nance from Goldman Sachs. Please ask your question.

I hope my audio is not also bad. But because I'm hearing it on a couple of people's calls now -- so I guess, I just wanted to hit on some of the trends that you saw on LACA. It looked like the trends there actually got a little bit better this quarter. So maybe just echoing the earlier question on the North American trends -- anything to kind of call out and just the linearity of results? Are we starting to hit easier comps and maybe some of the -- starting to lap some of the changes in migration patterns? And just any color on how you're thinking about that over the next -- in the near term?

Yes. And so a couple of things. One, we've seen some overall market stability, which we commented in the public comments. And as you know, it was in this quarter last year where we highlighted the impacts and the effects of the then recent elections across certain parts of South America, Northern South America and Latin America. We are now starting to see the lapping effects of some of those declines when the Darian gap was closed and when we had presidential elections in Venezuela and a few other places. Including Mexico. And so I think you're starting to see both the effects of some market stability as well as now we're a year into what was a relatively significant change in outlook and trajectory for the region following a series of elections.

Our next question comes to us from Bryan Keane from Citi.

Guys, thanks for having me on the call. Just wanted to ask on digital, in particular, it improved from 9% to 12% in transaction growth from the second and third quarter. But the revenue growth stayed about the same at 6%. Just trying to figure out the delta change there, why we didn't see a lift in the revenue as well?

Brian, thanks for joining the call. Really, the vast majority of the acceleration we saw from our partnerships in the Middle East, which are account-to-account payout, which, as you know, come generally with a lower RPT. So it's really a combination of that. So we've seen a little bit of we would have had a hair of slowdown in revenue and transvaluate, but that didn't help provide a little uplift on both sides. .

I think, Brian, the other thing that we've historically talked about given the current market dynamics where new customer pricing and we've actually seen some more aggressiveness in the marketplace on some of those offers, not just offering 1 time fee-free but in some cases, by some folks, 2 and 3 transactions free for new customers. The new customer growth causes a degradation in the revenue line. And so anytime we see an acceleration in transactions, we're likely to see, a, as you saw this time, stability or maybe even if we could accelerate it enough, some degradation in the revenue line relative to the transaction line. And historically, we are and will continue to be in looks of ways to cost-effectively accelerate and knowing that revenue will catch up over time.

Got it. And then just one follow-up on the guidance in fourth quarter. You're talking about an improved -- a slight improvement in retail going into the fourth. Is that all macro driven? Or is that something specific you guys are doing for the improvement in retail into the fourth quarter?

Really, it's driven by a few things. One is the comment was made a minute ago about LACA. We're starting to lap easier comps as we hit the latter part of the year. We've also seen some good momentum and some customer wins that will help or agent wins.

The other thing I would add, Brian, we talked about this, I think in the second quarter, we've asked one of our leaders who leads our European region to spend some material time with us here in the U.S., implementing much of the model that's been successful in terms of our go-to-market, particularly around independent agents the strategic pricing model that we employed there and a bit more rigor around managing that independent agent network. We're starting to see some of the fruits of that as well, and we are excited about the ability to integrate -- intermex and accelerate that retail program at a much faster rate than we have been able to over the last year, 1.5 years.

We're going to take the call from -- or the next question from Darrin Peller from Wolf Research.

Yes. Is that better now, guys?

Much better.

Just where do you see overall digital penetration going long term I mean the company is basically near global penetration of 38% [indiscernible]. Does that continue to move higher? And just talk a little bit more about how that impacts the take rate -- and then a quick follow-up would just be just when I look at the principal per transaction up 6%, is that a trend around people that are setting more now, but less often, just maybe associated with migration policies in the U.S. or something more structural?

Yes. It's a great question, Darrin. And so I think there are 2 or 3 things I think we would highlight what we believe and aspire to a reasonably stable retail business around the world, which will be somewhere between minus [ 2% ] and plus [ 1% ] over time as we get our operating model in place as we believe the retail value proposition does have merit, and there are many migrants, particularly new to country see value in that. We do expect digital to continue to grow at double-digit rates into the certainly intermediate if not indefinite future, which we will see over time, the ability of that digital become a larger and larger piece of our business with the stability in retail. We also know, at least for Western Union, there are a lot of places in the world. U.S. to India is one of them. U.S. to Guatemala is another one, where our digital penetration still has plenty of opportunity to grow relative to both the size of the market and our current market share. So we could even see some acceleration in that low double-digit growth that we've been seeing for the last 8, 10 quarters as we focus on specific corridors going forward.

All right. Thanks, Devin. Matt, just a very quick follow-up with just the understanding where Eurochange, is Eurochange entirely in consumer services? I'm just trying to get a sense of organic growth segments.

So, no, it's not. So we actually use the business for both CMT but also CS. They were an agent of ours before we acquired them. So if we're doing any remittance transactions would go to our CMT line and the rest CS. But to take away is, we're using that footprint for money travel money, we're using for prepaid cards. We're using it for remittances, and we split it up basin that type of product.

Our next question comes to us from James Faucette from Morgan Stanley.

I wanted to ask quickly about dynamic pricing in Spain. It seems like you've seen some good results there. And just curious how quickly you may be able to roll out to other markets and maybe start to garner some of the same benefits?

Thanks, James. Great question. We have rolled out dynamic pricing or strategic pricing, as we call it, probably in about half to 2/3 of our European market. We asked the leader of our European market to come here to the U.S. to help us. And we are in 3 metro markets at some scale now in the U.S. with the anticipation that over the course of and the integration with Intermex who has a very similar model that will be able to be kind of across the U.S. by the end of 2026. It has less applicability in other parts of the world like the Middle East, which, we have a lot of large master agents where they have a lot more control over pricing or frankly, in Asia, which has gone significantly more digital than either the U.S. or Europe is.

Got it. That's really helpful. And then I think, Matt, you touched on this a little bit, but I may have missed it, is that you guys have done a really good job in terms of your cost efficiencies, programs, et cetera. How should we think about like future programs or where there may be incremental opportunities on that side?

Yes. Thanks for the question. I'll actually spend about 5 minutes of that in 2 weeks from the day talking about our next step, but I'll leave a teaser. We still think there's meaningful opportunity ahead and look forward to sharing that with you on the sixth.

Stay tuned to like it.

And James, one of the things, the first part of our program really was what I'll call the blocking and tackling and Matt and the team, the broader management team did a great job of creating the normal operational efficiencies in terms of managing our real estate footprint. Reducing customer service calls, managing vendors, we're now starting to really see the benefits as we implement new technology. We have some adoption of AI into both our development functions, our customer service functions. Where we could start to see some shifting of the business model, which will, again, as Matt said, yield results for a reasonably long period of time relative to the first chapter of this, which was really just blocking and tackling.

Now I got to remove that page in my presentation. So, I got more work on Investor Day.

Our next question comes to us from Tim Chiodo from UBS.

Great. On the Intermex, 10,000 locations, they were always viewed to be as very strategically well placed, but one of the advantages was the speed, the UI, the UX, and it was generally talked about as being better for the agent, and that was something that was attractive to them. Is that an advantage that somehow gets ported over to Western Union? Or does that system get retired in the sunset and those locations move on to the Western Union platform. How would that all play out? .

It is our intention to maintain both the Intermex brand, the Intermex locations and the Intermex go-to-market model. We also are now as we begin integration planning, looking at ways in which we can take that into Intermex model and bring it into our V-Go independent agents and our Western Union branded independent agents here in the U.S. So we have aspirations of belief that we think we can learn a lot from what they do, and we will preserve everything that they do, the way they do it today.

Our next question comes to us from Rayna Kumar from Oppenheimer.

I think there's an echo here. So to hear me. Just on North America, it looks like trends have gotten a little bit worse versus the second quarter. you expected to improve from here? Like have we reached the bottom in North America?

Yes. So the quarter was, as I described in the call, what I would say is lumpy. We had a little bit better July than August was pretty tough. And then we started to see some trends in the back half of September and a little bit early here in October. But the linear improvement is certainly not there, but the directional improvement would seem to indicate that we may be hitting some stability relative to what we saw in either June or August.

Our next question comes to us from Nate Svensson from Deutsche Bank.

Thanks for the question. I wanted to ask on payout to account -- so I think last quarter in the Q&A, you mentioned a slowdown in growth there, but it sounds like in 3Q principal was up 40%, and it now represents 50% of the digital business. So maybe it's the Middle East partnerships, but I was hoping you could unpack some of the drivers and the improvement there and maybe how sustainable you think the trajectory impact to account could be?

I don't remember making that comment last quarter. We've seen very consistent 30%-plus growth rates for going on 2, 3 years now -- for account payout. So we see it everywhere. We're seeing strong growth in our retail business to be digitally funded. We've seen growth there with our rolling out more digital acceptance or card acceptance in Europe and North America. We've seen growth in account payout from retail. We've seen great account payout from our digital business as well as the new partnerships in the Middle East. So don't remember the comment from last quarter, but there was not a dip last quarter. There has been a modest acceleration this quarter, but I would argue it's modest, and the new partnerships have driven that because they're a largely account payout or digitally funded relationship?

Nate, I think we believe that this is a secular change in customer behavior. And again, whether it's originated in a retail transaction or a digital transaction, the received customers are rapidly entering the banking or digital wallet infrastructure in their countries. And we've seen that, whether that's in the Philippines or Malaysia, now even to a certain extent in Mexico, where the receiver preference is to receive the money in a more digital form. We think that has implications over time for us in terms of our payout network and our ability to create efficiency and streamlining some of our retail payout network. And the shift also in payout costs will become margin beneficial to us as payout to account has a different economic profile than pay out to cash in many regions around the world.

Our next question comes to us from Chris Kennedy from William Blair.

Can you just talk a little bit more about the 500,000 digital wallet users. What kind of engagement are you seeing or retention trends? Or anything you could talk about that?

Chris, we are on a journey, right? And so -- we launched our first digital wallet in the third quarter of 2022. And over the course of the last 3 years, we've iterated both the platform the value proposition and to a certain extent, the nature of the customers that we're acquiring. The customers that we're currently acquiring tend to be much more in the receive markets. And as I highlighted in the prepared comments in Argentina, Brazil, also in Romania and to a certain extent, even here in the U.S., people putting money into their wallets from inbound remittances and then using that either for everyday living expenses through our cards or through like in Brazil, the PIC system, is a growing trend for us. And so what I would say is our most engaged customers are those that are in our received markets and are using the product as an alternative to having received cash in one of our retail locations.

Our next question comes to us from Jamie Friedman from Susquehanna.

I wanted to ask about the the ability to transfer some of the best practices you've had in Europe, the European orders really doing well for you. I think you alluded, Devin, to some similarities or differences between there and here, like you talked about the independent agent network. But to what extent are those -- are there like synergies between those markets? And how can you transfer the success that you're having there here?

Jamie, great question. Thank you. We'll actually spend a bunch of time at our Investor Day talking about this. But recall, our European go-to-market model really has 3 components to it. One is the nature and shape of the distribution. Two is our go-to-market strategy in terms of how we structure our sales teams and our support model for the agents. And then third, which we talked about on this call already, really is the strategic pricing capability where we manage and monitor on a daily basis, market prices in specific locations in order to present the best possible option while maintaining our discipline on margins. And so those 3 components in certain ways differ in the U.S. So part of the rationale for the Intermex acquisition was Historically, in the U.S., we had a much larger base of the large strategic accounts, the Krogers, the public, the Walmart and as Matt mentioned in the commentary, we've gone through a big renewal cycle with those. We think they're important, but you have less ability to influence what happens in those than you do in the independent agent channel.

So adding Intermex into that mix significantly broadens the middle of that pyramid of distribution with a very strong independent agent, nonexclusive independent agent channel. The other part of the pyramid in Europe that we have is -- Matt will know this, but I think we're up to 300 or 400 company-owned stores across the European footprint. And the company-owned stores are 6 to 8x more productive than your average agent, and therefore, they play an important but small role in the strategy. Here in the U.S., we had when we get done with the Intermex acquisition and some other work we're doing, we'll end up close to a couple of hundred. So that change is kind of in process to get the distribution right. The strategic pricing, we're in the process of putting in place. I said we're now kind of in 3 metro markets with an aspiration to roll that out over the course of the next 12 months. And then on our go-to-market model, as we do the integration with Intermex, we will restructure our sales force and our agent support model to align much more closely with our European approach and the historic Intermex approach here in the U.S.

So again, I see that as in the second half of '26 getting fully implemented.

Our next question comes to us from Kartik Mehta from Northcoast.

Devin, just to understand North America a little bit better, I think you said August was a lot worse than maybe July or the second half of September. Was that a result of icing competition or just the market was really slow?

From our view, it was a market view. We didn't see any different, what I would call, competitor behavior, but we certainly did see different consumer behavior and so again, we don't have complete transparency, but the bank to Mexico data would also support some of that as well where June was probably the worst. July improved moderately significantly and then August reverted back to a double-digit decline. So I can't explain it. I can just tell you what we observed.

And just to build on Devin's point there, just give you some external data. Bank of Mexico had a low point for the year of down 18%. July got down 13% down 17%, then down 12% and the improved from there. So it's bounced around as time has passed on a transaction basis.

Our next question comes to us from Zachary Gunn from FT Partners.

I wanted to ask on consumer services and apologies if this is -- if I missed this, but what was the contribution from euro changes over I know you stated consumer services still grew double digit uniquely. And just with that in mind, I appreciate the comments on 4Q and some of the headwinds in consumer services. But how do we think about the sustainability of that growth kind of going forward?

Zack, pleasure to meet you. I said in the prepared remarks that the Eurochange acquisition contributed roughly nearly half of the overall CS growth this quarter. So that's the simple answer to your first part of your question. And then to your second part about how sustainable is consumer services in the long run. We've now had 3, 4 years of 10% plus growth in that business, how we've gotten there has varied from year-to-year, but we've got lots of new products that we've launched that are starting to scale. We've got some that are doing very well already, and there's new ideas we're working on. So we think there's a long runway to continue to grow consumer service for the foreseeable future, and we'll do a really good long deep dive on that in 2 weeks.

Our final question will come to us from Gus Gala from Manas Crispy Heart & Co. Please ask your question.

I wanted to ask about the [indiscernible] strategy to the U.S. when we -- as we think about that, I mean, is your fleet in Europe a little bit more focused on smaller retail format versus a large retail format in? And then just by thinking about how cities are set up in Europe versus the U.S. what are kind of some of the differences as changes that you're having in terms of trying to approach in retail?

Yes Gus. great question. So the European model is slightly different than the U.S. model, but there are analogies. So the European model does have a relatively significant independent agent network, of which Western Union has a pretty strong presence in, which is different in the U.S. where we've historically participated in the independent agent channel with our Vigo brand and less so with our Western Union brand. But there is a large and significant independent channel in the U.S. We've just had less presence in it than say a Ria or an Intermex, which was part of the opportunity with Intermex. The U.S. does have a large base of what I will call the strategic accounts for us, the Walgreens, the Krogers, the Walmarts, that is not true in Europe. The analogy in Europe, though, is a fair number of relatively significant postal systems. And so like in the U.K., we have the U.K. post or in Spain, we have the Spanish post. We work with Laban Postal in France. And so that big base of what I'll call relatively lower productivity, but omnipresent distribution is done with postal systems in Europe versus grocery or convenience retailers here in the U.S. So we see the biggest opportunity really to bring and import some more of that independent agent model and do it on a -- as I said, we're doing it on a city-by-city basis, just like in Europe, so we're now implementing it in 3 major metropolitan areas in the U.S.

But the reason it's going to take some time is you got to do it across 50 or 60 when in any European country, you do it across 3 or 4, and you've covered the majority of it. So we see upside. We see potential. We like the Intermex acquisition. As an ability to accelerate it, but we think the model is right, whether it is in Europe or here in the U.S. Thanks, everybody.

Thank you for joining the Western Union Third Quarter 2025 Results Conference Call. We hope you have a great day.