西聯匯款 (WU) 2025 Q4 法說會逐字稿

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 US to Mexico.

Although from a transaction growth rate perspective, the US to Mexico quarter improved 100s 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 (inaudible) will be many more opportunities for geographic (inaudible) 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 US 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 six 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 US 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 one-third of them are initiating new international money transfer transactions. While these numbers remain small compared to the scope of our overall US business, they do highlight the power of the model we are building.

As you know, the US wallet is an extension of our broader wallet strategy. Our goal is to create a two-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 US 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 US 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 US with debit cards now accounting for 15% of all retail funding in the US 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 US market in the quarter was US 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 US 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 two 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 two to three 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 two 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 two 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 US 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 US 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 two 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 one of the two 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 five-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 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 four 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 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.

US 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 100 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 three 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 2.9 times and 1.6 times 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) Tien-Tsin Huang, 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 Intermex 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 six weeks into the year. We are seeing an improvement relative to our Q4 performance six weeks into the year. As you know, we saw the slowdown in the Americas, in particular, the US, 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 UK 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 (inaudible) 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 two 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 two 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 two 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.

Darrin Peller, 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 two, three 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 US. 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 three to six months.

Will Nance, 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 two tough questions together. So on the branded digital side, what are we expecting, what's built into the guide. We've now had two 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.

Rayna Kumar, 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 this 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?

Hey, 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 US 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.

Timothy Chiodo, 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 two 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 (inaudible) 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.

James Faucette, 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, US and Mexico, which has been up and down over the last six to nine months.

Holistically, it's been very similar across the US, 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 US 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 US 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 US 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 US retail business.

Bryan Keane, 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 guys.

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.