The Western Union Company (WU) Earnings Call Transcript & Summary

Good morning, and welcome to the virtual Wolfe FinTech Forum fireside chat with Western Union, hosted by Wolfe's senior analyst covering payments, processors and IT services, Darrin Peller. [Operator Instructions] And now I hand the call over to Darrin.

All right. Thanks, Tina. Thank you, everyone, again for joining us on our virtual Wolfe FinTech Forum. This is the tenth year we're doing this conference. And as much as we would have rather done it in physical presence, we're obviously happy to be able to do it in this way and keep everyone safe. Look, with that in mind, I also want to thank Western Union for joining us. Obviously, it's really great to have, especially in these flexible arrangements, but Raj and team. We have Brad and Brendan from Investor Relations there as well. But Raj, the CFO, is with us. So thank you very much for joining us, guys.

Yes. Darrin, really appreciate the opportunity regardless of whether it's virtual or not. So I'm looking forward to talking with you today.

All right. Thanks. We're going start off. We're going to talk about a few different topics. For the audience, anyone that wants to ask questions at the end, I'll try to leave a few minutes. You can just type them into the text box, as you've been doing for the rest of the conference. I'll read the question at the end, keep it anonymous, from who the client is, assuming there's time.

And with that in mind, Raj, as much as I really want to get into the core business and the growth, I can't -- I think it's sort of -- have to just get out of the way and ask the question on everyone's mind around most companies, which is just how to think about the potential impact, if any, you're seeing from this virus and travel or any type of impact on flows? I mean, maybe you could add on to that, what you've seen in past cycles, even if it's not specific to an outbreak like this.

Yes. Yes. I mean, generally, our business has been very resilient in the past regardless of conditions around the world, and that continues to be the case. I think the great thing about our business is that it -- mostly, it's not just -- it's not discretionary in nature. So we really have not seen a material impact to our business as we look at it globally, and we're monitoring the situation. And obviously, as we talked there, and it changes every single day, and we'll keep monitoring. We did see a little bit of impact in China, but China is only 2% of our revenues. And it's mostly an inbound market. And then in certain pockets, in other hot spots, like Italy or South Korea, but not a material impact overall for the company, I would say. I think the other -- and as I mentioned, most of the reasons that people are sending money in our business are for needs that people have, like medical expenses or food or education, and those things continue on regardless. And you could even argue in some markets that we're seeing that the virus -- that could have an increased need for potential money to go over there, right, as people lose jobs or if they're in the tourism industry. If they lose their jobs, maybe they need more money for people who can -- who have the ability to send the money. So we'll just see how things work out. We have a lot of send and receive markets, as you know, and they -- sometimes they offset each other, but nothing material at this stage, but we'll keep evaluating. We don't know yet how this is going to play out. Each country is at a different stage in its cycle. China -- maybe China is going to stabilize in terms of the virus conditions, we'll see. So we'll just continue to monitor. The other thing to just add, Darrin, is that the -- we have a lot of different channels that are available to customers. So regardless of what's happening, we have a great digital business. We have bank funding capabilities, bank payouts. And so we really are encouraging and allowing customers to do the transactions however they want, whatever they're comfortable with. And that's -- the beauty of our business is that we can bring a lot of different components to bear in a situation like this. So we'll keep monitoring, and we'll let you know as we see something more material there. But thus far, we have not.

One quick one also might just be -- not necessarily related to the outbreak of the virus, but more of the fuel price volatility we've been seeing. And I just can't help but ask just given what we saw on Monday, earlier this week. I think in past scenarios when oil drops a lot, there's an impact on maybe the Saudi to Asia corridor or maybe you could just give us a -- fill us in on what you've seen in the past around that. Hopefully, this time, it's not as prolonged, but if it carries through...

Yes. I think -- absolutely. And I think -- again, the thing to remember is our business has been very resilient regardless of the cycles that we've gone through, the issues that we've seen in the market, and we've been quite stable. And I expect that that's going to continue to be the case. The OPEC or oil-related revenues in our business, if you look at the countries that are oil-related, is about 10% to 15% of our revenues, 10% to 15%. And the bigger oil price shocks that we've seen in the past where when we were at $100 and it went down to $30 per barrel.

Yes.

We have a little bit of a shock today, but oil prices generally have been lower for many years now, and we'll see. I mean, ultimately, we don't see an impact right away. If construction projects, other things start to happen where people don't have their jobs, and we may see some impact from those things, but usually, we see it on a lagged basis. So it just depends on how long this thing stays in place. Saudi Arabia, their intention might be to get -- grab market share here, right? So as they actually increased volumes and the total output from a revenue standpoint for their country is similar to what it was, maybe there isn't much of an impact, right? So we just have to see how things play out with the oil price situation and ultimate volumes but we have a very diversified business, as you know, Darrin, and that it's a smaller portion of our business, but we're continuing to monitor that.

Okay. That makes a lot of sense. That's helpful. Can you maybe just shift back to the core business now, and hopefully, this whole thing is not long term. And so when we think about updating the business and just recapping the fourth quarter, can you just go over some of the key trends you saw last quarter? And remind us of some of your thoughts into 2020 for a minute, and then we'll go from there.

Yes, absolutely. The business was solid in the fourth quarter from a core business standpoint. The -- we had very strong digital growth. We had 25% digital growth, which includes wu.com plus the digital white label partners. We also had the B2B business, which for the full year grew 4% last year, so that continues to track well. Our regional consumer business, we had good growth in Europe and Latin America as well as U.S. outbound, particularly New Mexico was also good. And then that was offset by declines in our Asia Pacific and domestic business. And then we did call out a few things that were sort of impacting us all at the same time in the fourth quarter, some geopolitical events, civil unrest and some macro-type issues, which we did say that we would expect to see those in the early part of this year. And I would say it's playing out largely as we had expected. So no real surprises there. And we were very pleased to give the outlook that we gave back in February for this year. And just as a reminder, we did indicate low single-digit revenue growth, constant currency adjusted for the divestitures we did last year. We also are targeting a margin expansion on an adjusted basis by about 100 basis points this year to about 21%. And then we also gave EPS range. It was $1.95 to $2.05, which if you take the midpoint of that, that implies a teens type of growth, solid mid-teens type of growth. So very strong outlook, and that's why we also raised the dividends as we did by 13%. And in this environment, the dividend yield looks really good. So it's an attractive place to be, I would say, if you're an investor.

So to your point, it sounds like some of the headwinds you saw last quarter that we talked about earlier and you just talked about as well were -- they sound like they are trending in the direction you had hoped they would when you reported earnings. So the guidance is still very much intact.

Yes. I mean we're not going to restate guidance at this stage because that was given in February, and we'll give you our first quarter results in early May, and we'll give you the latest that we're seeing. But with respect to the coronavirus, we have not seen a material impact, as I mentioned, and then we'll see how the oil price situation works out. But again, we have some natural offsets in our business as those things play out.

Okay. All right. Just bigger picture now, the World Bank, I think, was forecasting mid-single-digit remittance growth over the next couple of years. Strength in outflows to Asia and Europe, obviously, is a big part of that long-term upside, driven by, obviously, more and more migration. How does this compare to what you're seeing in the market and the overall macro trends around migration, remittance flows? Are there any other areas of strength or weaknesses you want to call out? Just really trying to get a sense of how you feel like you're positioned in the environment that we're talking about with mid-single-digit remittance growth potentially.

Yes. I mean, we also expect good growth in the remittance market and migration. So those trends, longer term, should continue. This year is a little bit of an aberration, but we should continue to see good growth there. We continue to drive growth in the key outbound markets. So I expect that U.S. outbound as well as Europe and Latin America for us will continue to be good growth drivers. We do think pockets of the Middle East can be good growth drivers, and that's really where our focus is. In addition, Darrin, we're very focused on driving the digital aspects of our business because we do believe that's going to be the key growth driver in the market. And our position in the digital side of the house is very strong. And we can certainly talk more about it, but we have a lot of good things happening on the digital side, whether it's the branded or nonbranded offerings that we have. And we're adding more channels and more things there to allow customers to do business with us in more ways, and that's really going to be the key growth driver in the cross-border remittance space, and we have some opportunity there. So we're very excited about that opportunity.

Could we -- maybe it was follow-up on digital right now then. Because it's obviously been an area of investment for you guys for a number of years, you've gone at it in a more organic manner than some other companies, building out the wu.com abilities. Where do you stand in terms of what you think is the technological innovation necessary around that to keep it competitive? From a growth rate standpoint, do you foresee that being able to hold up at a rate that it's been growing similar levels? It did -- I mean, I think it ticked down growth in terms of at least transactions by a small amount. I think domestic drove a lot of that though. So just give us a little more color on what you think that opportunity is and if it's sustainable for you.

Yes, we feel very good about the long-term opportunity in the digital side of our business. We do believe that, that business has the potential to grow in the 20% range for the near-term here. And that includes both wu.com as well as digital white label. And there are 2 different components. Let me describe each one. wu.com, we have 75 send countries roughly that customers can use to send money abroad, which covers about 70% or more of the outbound principal opportunity today. So that covers a lot of the world and a lot of the opportunity. And the strategies that we have on dot-com are to keep improving the features and functionality in our platforms. Ultimately, that drives better retention levels of our customer base. Secondly, we are investing in marketing to acquire customers, and that is the long-term growth vehicle for this part of the business. And then third, there's been a heavy focus on distribution. And that -- so more than -- we want to be in 200 countries and territories over time, not just 75 send countries because we do believe there will be incremental opportunity there for us to grab. We want more account funding capabilities, more account payout. Today, we can pay out to accounts in more than 100 countries, but we want to make that real-time in nature. We think there's a lot of value that consumers would see in having real-time payments around the world, moving money from account to account real-time in nature because nobody can really do that the way we can do it as we combine it with our retail outlet as well. We also have about 45 markets that are mobile-enabled. So we see about 80% of our transactions being initiated on a mobile device in the wu.com business. So the wu.com part of digital is very much on a great growth track, and we feel very good about it. Last year, the total digital business was about $600 million or north of $600 million in size. And if you can grow that total business in the 20% range, that continue -- you can see how it starts to add to the revenue base of the company very quickly. And then on the white label side, Darrin, that's just a great example of how we can leverage our platform for cross-border payment opportunities for other companies. So we really are the processor in that example, right? We are -- it's true that we've highlighted Saudi Telecom and Sberbank. Western Union brand really isn't present there, right? It's really a Saudi Telecom transaction, Saudi Telecom customer. So in that scenario, we are being delivered a good customer with good funds that has a need to move money cross-border, and we do the processing for them. So it may be a lower revenue per transaction starting point, but it doesn't cost us as much money to also process that transaction, right? So it can be very profitable from a margin standpoint in that business because we're not spending the marketing dollars to acquire those customers.

Were there any -- yes. No, that's an area that I know are looking -- our clients and investors are extremely focused on for you guys. And so I just want to hone in on that for a minute. I mean, you talked about Saudi Telecom and Sberbank. You also talked about a couple, I think, in Korea and Japan, if I remember correctly, right?

Yes.

In terms of those opportunities, first of all, like how far along are they in terms of launching? What kind of contribution have they been giving you guys so far? Were there any promotions around them, like low-price promotions to get the ball rolling that might have helped transactions? And then more importantly, what kind of opportunity do you have for maybe a lot more to come in terms of incremental partners?

Yes, we do believe there's a lot more to come. We have many that are in the pipeline. Not every single partner is going to be as successful as the 2 we launched, right? Because in Saudi Arabia, you have perfect conditions for a successful outcome. You have millions of migrants that are in the market, you have the main telecom company in the market that most of these migrants are probably using and then we provide the cross-border remittance service to this partner. It's a set of perfect conditions. Not every single market will have those conditions in it. But we have a number of other partnerships that are in the pipeline that you will begin to see, and we do believe this will be a key part of our growth trajectory over the next few years and part of that digital equation that I talked about. And we feel very good about where these things are. These things have a long cycle -- sales cycle associated with them, and so that's the process we're in. And -- but we're confident that with the capabilities we have, it really sets us apart from other potential providers of something like this, especially as we add more talent capabilities on both sides, right? I mean if you match it along with our retail capabilities, that is a very powerful combination that very few companies are going to be able to provide.

Is it -- I mean, I don't know if you've quantified the contribution from those so far. I think you might have touched on it on a per regional basis, right?

Yes, yes. We haven't singled those out because we -- they are certainly in the regional numbers that we provide. And what I can tell you is that Saudi Arabia and Russia, for example, we had the best revenue and transaction growth in those 2 particular markets in the second half of last year that we've seen in a long time, and that is particularly a result of these white label opportunities. So we know it's translating into largely incremental business for the company. And it certainly is having a positive impact on these 2 markets in that region.

So other than the -- and this is a question we got, other than the sort of geopolitical topics that came up in the fourth quarter, it wasn't -- in your view, there was nothing around these partnerships, the white labeling partnerships that slowed down or anything along those lines, whether it's revenue or transactions relative to the quarter before, the geopolitical stuff?

No, no. These things continue to accelerate in the fourth quarter. They were very strong, and we would expect that they will have a good performance this year as well. And so the things that impacted us in fourth quarter, they were just -- I have a long-due list of things which I won't go through, but they were a long-due list of things that sort of impacted us in Q4. And we don't believe those Q4 items will impact...

You think those are transient primarily, right?

Yes, exactly, exactly. And obviously, we have to think about the newer items this year. But again, the stability of our business has been very good.

Okay. All right. Just thinking of the core C2C business for a minute beyond just white labeling and even digital. Overall, I mean, the revenues have been relatively stable in Latin America and Europe, I think, offset by a few areas of weakness. But I mean, what are the regional forecasts that you see for the company? Do you have any visibility on the potential rebound in Asia after -- I guess now it's a little tough to know. But from your perspective, does it look like it's bottoming out now? I mean a lot of other companies we've had on talking about coronavirus have actually said they've been seeing recent weeks of somewhat of a more stable footing, hopefully.

Yes. I mean, let's see how that plays out. I think Asia Pac specifically for us is -- we looked at that more -- the way we report the numbers, Darrin, is more from an outbound view, right? And it's only 6% of our consumer revenues from an outbound view. We really think the bigger opportunity is all of the business that goes to Asia, right, from other markets. And that's really where our focus is to drive more business that delivers money to the Asia Pac type of markets. Now on the outbound side, we obviously are doing a number of different things in the pricing, marketing and other incentives area to try to drive more growth there. But that's not going to be the big determinant for us in terms of our overall success. It's going to be the inbound business to Asia. We are really heavily pushing the digital channels in some of the Asia Pacific markets because that's what the market requires. We also have things like Philippines, which has a -- when you look at it from an outbound standpoint, there's not much there, and there's a domestic business in the Philippines that is very tiny in terms of revenue, but it has a lot of transactions associated with it, right? And so when the transactions are declining, it has sort of a negative mix impact as you look at the declines in the transactions there. So there are a number of specific things in APAC, but the bigger opportunity is really getting more money from the key Alpine markets into Asia Pacific.

Okay. And then the other regions, just real quick, Raj. I mean, do you see anything -- any nuances we should be aware of in terms of trends and then over the next 12 months?

I think the one thing I would just call out and it's -- although we're seeing declines in the domestic business here in the U.S., it's becoming a smaller part of our business. Last year, U.S. DMT was about 6% of our total revenues. The year before, it was around 7%. So it's becoming a smaller part of our business. It's less of a drag as we get through the next couple of years, and that's a positive thing for us both in the retail as well as the digital part of our business. And so we're really managing that business for good cash flow. And that's really been the trajectory there. And I don't think that's an area where we're going to be competitive long term. And we've said that before. The business is never going to go to 0 because there's always a reason to send money for emergency and other things in a domestic market. But we'll continue to manage that for good cash flow outcomes.

So that's what we should assume. It's just you keep that, manage it for cash flow, obviously, it's -- whatever headwind it is, but it's a smaller percentage of the mix ever.

Yes, yes, exactly.

No, like, strategic changes, otherwise. It doesn't really seem like a...

No, not on the domestic side, no. Not on the U.S. domestic side. And there's not a -- there's no other big domestic business anywhere else in the world. It's really just the U.S., and that's becoming a small piece for us.

Okay. That makes sense. Quickly on pricing. Again, it looks like it's been relatively stable, especially when we think about it versus years ago when you always had this 200 bp headwind more or less on your revenue growth from it. It's gotten a lot better than that. So what are you seeing now? What are your expectations on pricing for the next quarter or 2 and then the year or 2? And then maybe we can touch on your dynamic pricing initiatives and where you stand on that.

Yes, yes. Overall, from a pricing standpoint, we see a relatively stable global environment. We have 20,000 corridors or country pairs, and so we're always moving pricing up and down in those individual corridors. But when you roll it all up on a global basis, there's not a big impact to the company. And to your point, we are also pushing heavily on the dynamic pricing side of things. So dynamic pricing, I mean, things like location-based pricing or location density based on what we see the competition doing, time of day, day of week type of pricing, all of these things are components we're putting in place. And so if you can think of 20,000 corridors or country pairs and then you have different -- few different components that go into each one of those corridors, it becomes very powerful on what you can achieve from a dynamic pricing standpoint. And I would say we're not as automated today as we will be over the next couple of years. And we have some technology in place, but we need to automate even more of those decisioning processes. And we really feel good about that. That's what makes us feel good about getting a relatively stable outcome on the retail side of our business. On the digital side, we have much more flexibility in terms of how we can dynamically price things, and we do that all the time. Retail is where we can really get the -- a nicer lift as we automate more of these things, but we'll see some of that benefit this year, and that's what gives us confidence overall in how we think about the business in the next couple of years.

So you expect the actual impact from it to be maybe, what, second half of '20 in terms of more notable impact?

We'll see some positive impact from pricing. There's always a dynamic of negative mix impact in our business. So we'll see how that offsets it. But pricing generally should help us, and it will be offset by somewhat negative mix impacts as different parts of the world grow. But overall, we feel good about that opportunity.

So I mean it really does sound like in line with your guidance, you'd expect transaction trends to be roughly similar to what we've seen, putting aside the coronavirus questions and whatnot, although that doesn't seem like it's having that much of an impact. You have domestic that's running at a similar rate to what you've seen and pricing that's, in your view, relatively stable, with some optionality in the second half on it if the dynamic pricing conditions go well.

Yes. I think we just have to keep an eye on how does the virus situation expand in other markets. We've seen the trajectory in China and we see it maybe stabilizing. We'll see what that means. The U.S. is just coming into it. So we'll see what that looks like. But generally, given the other channels we have available to people, we think there are some good mitigants there. And then the oil price situation, nothing immediate to talk about there, but we'll monitor how that plays out this year. But if we can look through these specific issues, we feel very good about our business and the outlook that we've given over the next 3 years.

How about the other technology partnerships potentially? I mean Amazon was a big one, a big announcement for you guys. I know it's going to take time for it to really roll out in full force, but it was a smart idea, I think, for both, and it helps -- you guys help each other well with that. I'm just curious if, a, how that's going and then if there's others like it that we can expect.

Yes. I mean, it's going really well. We have -- it's not a big revenue contributor still today. But the partnership is excellent, and it's a great example of how we can use our business for nonremittance types of use cases because this is not based on remittance flows. This is really a cross-border e-commerce, right? So this is people buying goods and services, things -- other things through Amazon and then they have a way to pay for them that they may not have otherwise had, right? So we have it rolled out in about 21 markets now, including the U.S. We don't have it in every single location in the U.S., but -- or in all the 21 countries, but we are certainly expanding that. And the goal ultimately is to be global with that at some point in time. The primary focus today, Darrin, is to improve the customer experience, make sure that's going perfectly, as you would expect from someone like Amazon, and then we'll roll it out more broadly and make it something bigger over time, but it's really about creating customer awareness and creating a good customer experience out of this whole process.

Okay. Look, all of these initiatives are happening while you're also cutting costs and restructuring, as you mentioned at your Investor Day. I think there was a tracking towards $150 million of annualized savings by, I think, the '22. If you could just speak to any progress you've been making around that. And how is the company -- how has it been impacting the company? Has it been absorbed? Has it been being absorbed well, especially as you reinvest in the business?

Yes. We feel very good about the cost savings initiatives that we have underway. We're very much on track with the things that we've said. And just to remind everyone, we took about $115 million of restructuring charges last year. We expect another $35 million to $40 million this year that are related to the same programs, and that is going to translate into $50 million of incremental savings this year, that -- and then a run rate of $100 million next year, right, from just the restructuring activities. And then in 2022, we're going to add an additional $50 million of savings, getting us to this $150 million of run rate. That last $50 million of savings will come from 2 components: our commissions, which is the #1 cost item we have in the company at about $2 billion a year; and then other third-party services on which we spend several hundred million dollars a year. So we plan to get $50 million of savings there out of those 2 items. Just a little bit about commissions. We've done a very good job over the last few years in reducing commissions either through direct negotiations or mix changes in the business as we become more digital. And so we expect that trend to continue, and we have some additional strategies we're deploying. And on the other third-party services, the services that we acquire, like technology providers outside the company or real estate or marketing or other things like that, we have put various spending control towers in place inside the company to manage health management spending. And we're looking at every single cost or line item to minimize the spend there, and we're having really good success there. So I expect that we're going to be very much on track with that cost savings -- with the cost savings initiatives, and that's something that we feel very good about.

Okay. That's helpful. All right. For anyone on the audience, we're going to open it up to questions in just a minute. So there's a text box here. Like I said before, you're welcome to type in questions into, and I'll take them at the end. But one last question for me is just on -- well, really 2 questions. One of them is on competitive dynamics. We still get questions from investors over newer entrants or potential digital disruptors. I guess, what are you seeing now versus maybe a year or 2 ago in this regard? And anything you anticipate going forward around this? Has anything really changed in the environment or competitive landscape?

I would say the competitive landscape is similar to what it has been the last year or 2. We continue to see intense competition throughout our business, but we are very well positioned, I would say. On the digital side, there are many digital competitors, but we -- I'd say this over and over again, but I want to just reiterate here, we really have a unique offering with the -- with our digital business because we -- most of the transactions are -- they're digitally initiated, but most of them pay out at a retail location. And that's how we earn our revenues as they pay out at retail because that's the way our recipients want to receive the money. So that's not the area that competitors are trying to come into. They're trying to play in the account-to-account space, which is also a great growth opportunity for us, and we really believe that we can build a great account-to-account -- real-time account-to-account business that's going to be better, faster, more transparent and more easy for consumers to use than anybody else is going to be able to provide given the cross-border capabilities that we already have laid the foundation with. And so that's really the path that we're heading on. And I feel very good about what we're going to be able to do long term with our digital business and the channels that we're going to provide to consumers. I don't think it's going to be something that others are going to be able to replicate very easily in terms of where we're headed globally with 200 countries.

Okay. All right. Just in interest of time, I'm going to take the audience's questions, if that's okay with you now?

Sure.

All right. So, so far, there's a number of them coming in. The first one is, how do you balance saving money on commissions without customers leaving for other providers?

Look, the success that we've had in the past 2 years, we believe, will continue on the commission side. Our agents are sharing heavily in the growth that we're getting on the digital side of the house. So it really is a win-win situation we're trying to create with our partners. When we bring in other kinds of partnerships and other kinds of partners that we're working with, our agents share in all that growth and business. And so absolutely, it has to be value-enhancing for the agents and partners that we work with and obviously for us as well. So we really do believe that we can balance both of those. From a customer standpoint, we want to make sure that we're driving good customer experiences at retail, making sure that it's easy for customers to transact and making sure that they have good locations that are ready and able to serve the customers as they have in the past. So we're not too concerned about that, and it's going to be really a trend that we've seen in the past few years that will continue the next few years.

Okay. All right. The next question we have from another investor is, Western Union launched a cross-border payments business. Is that B2B? How big is that business? And what corridors and verticals is that business focused on?

Yes. I'm not sure exactly which business they're referring to, but we have -- we obviously have our B2B business. We have various vertical segments in that, the education segment, the FI segment. So those are certainly cross-border. They're sort of B2C, if you will. We're selling to the university, but they're providing the service to their consumers or their students or families. And so we're going to continue to push on those vertical areas. And we sort of look at everything we do as cross-border payments. So it's hard to single out a particular component.

I mean on that note, it sounds like you guys are really -- you sound more dedicated to maintaining your focus on that business rather than any strategic initiatives around those or alternatives around those, which I know came up maybe a year or 2 ago?

Yes, yes. I would say we're very focused on execution in our B2B business. Having said that, it's -- we would always have to evaluate something from a strategic standpoint if there was value-enhancing opportunity, but that is not our focus today.

Okay. There's another question also. Paying into digital wallets and from such wallets, where is the opportunity?

Yes. I think the longer-term opportunity for us is to think about how we can enhance our relationship with our consumers. And today, it's an end-to-end money transfer transaction or payment that somebody is making, but we believe there may be other opportunities in the middle of that transaction to insert ourselves to see how we can create more cycles out of the money that's being delivered around the world. And so we think there's more opportunity to create more deep relationships with our consumers. And we have wallet relationships, mobile networks. We have wallet relationships in various parts of the world, including in parts of Africa as well as in parts of Asia. We haven't seen it take off in any big way other than in Kenya, which we do participate in. And we also have safaricom.com. We don't talk about that a lot, but we allow all of the safaricom.com customers to fund from their wallet to be able to send money abroad, anywhere in our network. So those are the kinds of things that we'll continue to work on.

Maybe we'll just take one last one since we're just about out of time. And it's about capital allocation, asking we know you expect a return, $2.5 billion to $3 billion of capital through the next couple of years, can you talk about any incremental ideas on M&A?

Yes. So I would say that, first of all, our capital priorities are the same as we stated, which is to invest in the business to drive organic growth, as we've talked about digital expansion. Secondly, we pay a very healthy dividend at well over $300 million a year, and that's a significant use of our cash flow. Third, we do want to find the right kind of M&A opportunity if it fits within our payment strategy, and I'll come back to that in a moment. And then lastly, we use our excess free cash flow for buybacks to the extent that the price is good, which it obviously is today. From an M&A standpoint, we're going to be very open to doing what fits within our cross-border payment strategy. It could be a direct acquisition of revenue. It would have to be at the right price and fit well within our strategy. It might be a cost play, might be a revenue type of play. We also will be open to looking at technologies that will help to support all the things that we want to do, more mobile capabilities or more account payout, account funding, things like that, that can help to support the things we want to do. It has to advance the ball for us the couple of years for us to look at something like that. If it's just adding the capabilities that we already have, it's not going to be of high interest to us, right? So more to come on that.

Okay. Look, there's other questions, but we're out of time. We're actually a couple of minutes over. So why don't we leave it there? Raj and team, Brad and Brendan, thank you guys very much for doing this with us. And for any investors on the webcast, on the call, if you have further questions, just e-mail them me and I'll help get them to Western Union as well or you can probably just e-mail them to Brad and Brendan as well.

Yes. Thanks so much, Darrin. We really appreciate it.

Thanks, guys. And again, we have the next one up is at 11:25 Eastern Time, a panel discussing cross-border -- really cross-border B2B payments. But guys, thank you very much, again. Really appreciate it. And we'll -- hopefully, we'll speak to you guys shortly in better times. Be safe, everybody.

Yes. Thank you. Take care.

Thank you.

Thanks, guys.