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

All right. So we will get started. I am delighted to have Matt from the -- from Western Union here to join us today to talk about some of the trends in the business. Matt, I believe, prior to joining Western Union, you were at merchant acceptance at Fiserv. You held a number of senior finance and accounting roles and spent 10 years at Coca-Cola, so long tenured in this industry and others. Thanks for being here. I'm excited to have a conversation with Western Union today.

Awesome, Will. Thanks for having me. Great to be here today.

Matt, I wanted to kick off on company culture actually. I mean I think it's been close to about a year that you've been at Western Union, one of the oldest fintechs in the industry. You have a new management team, a new strategy. What is the feeling inside the organization? And how has that changed under new leadership over the last year?

Yes. Well, great question, but actually I just hit my a little over 13 months last week, so it's been a fast 13 months. It feels like a 172-year-old start-up company. We've got a fantastic set of assets. We have a brand that's recognized around the world. We've got one of the largest agent footprints around the world for any of our competitors in the space. We've got 120 million clients between send and receive clients, so we've got a great foundation. And we have 8,000 fantastic employees with a passion for our aspiration, which is to serve financial -- provide financial services to aspiring populations of the world, so it's a great place to be right now. I think our Evolve 2025 strategy is something the team is galvanized behind. They're very excited about stabilizing the retail business, which is an area that we've actually underinvested in over the last couple years but are starting to see some great tractions. They're all excited about reinvigorating and accelerating growth in our digital business. And they're also passionate about the expanding the ecosystem and the additional products and service we can provide to our customers.

Yes, makes sense. And I guess, beyond the kind of changes that have happened over the last year at Western Union, like, investors have been very concerned about the macro environment overall, the recession that's perpetually about a quarter away. I think in remittances it's even harder. I think generally people perceive it to be a defensive business. How has macro impacted your business recently? And how are you thinking about global remittance volumes over the next, call it, 12 to 18 months?

Yes. This is one of my favorite questions because I wish I had a crystal ball that told me, but as you probably saw recently, the World Bank put out their semiannual remittance report. They've estimated that remittance volumes this year will be about 1% growth in principle. They've estimated that, next year, it will grow about 2%. They have a history of being very conservative in their numbers. When they published this, their estimate for last year went up by multiple hundreds of basis points, but the way I look at that report is it basically tells me next year should be easier than this year, which is really how I look at it. When you look at our -- inside the 4 walls of Western Union, what really drives our business, we look at really 3 elements. One is what's happening with immigration. In a world where you're moving -- people are moving around the borders, that's a good thing for Western Union. It's a good thing for this industry. We look at FX movements. That's an area where you can actually see small movements in behaviors because people will hold onto their money when exchange rates move the wrong direction, for whichever way they're sending money. And over time, we don't think it will really have a massive impact, but in short windows, it can cause behavioral changes. And the last one is just overall growth in the economy with unemployment. Thankfully, our customer base has largely been resilient over the last couple of years, and it looks like it will be that way going forward.

Got it. So maybe switching gears to the Evolve '25 strategy goals to stabilize the trends in the retail business, accelerate digital growth and expand the products and services that you offer to your customers. So I wanted to maybe kick it off with a discussion of the retail business. In some of the recent quarters, I think you've recently talked about improved trends in the retail business in the second quarter. How sustainable is this for the balance of the year? And I guess, more broadly, what do you think is driving that improved trends?

Yes. Well, Will, we've seen tremendous improvement. It's one of the areas that we've been pretty proud of over the last 4 quarters. We've seen our retail business going from being down 7% on a transaction basis last year, in Q2, to this most recent quarter we published. It was down by 2%. So I'm not trying to tell anybody in the room here or yourself that you should take that 500 basis point improvement and project that over the next 4 quarters, but our goal we had at Investor Day last year was to stabilize this business. And we feel like we're well on our way to making that possible as we're starting to approach 0. How has that been possible? I wish it was some silver bullet that was easy to tell you it's, hey, we did this one thing, but it's been a ton of blocking and tackling. It's one of the reasons why I talked about it in the last question, about it's a bit of a 172-year-old start-up. It's getting your hands dirty. It's talking to agents, understanding what is broken for them, going and working on product solutions that will make their lives easier, working on our customer service and treating people like customer or -- customers like people. And it's just a lot of little blocking and tackling.

Yes, makes sense. Well, I guess increasing the retention in that business was a key part of the strategy. You've laid out some metrics on what that -- what driving higher retention can drive for the business. You've seen some early progress on that front. Can you maybe touch on what you've seen, so far, and how you're thinking about 6 to 18 months trajectory of retention?

Yes. So retention has been -- we felt like, when I joined the company about a year ago, it was an important area for us to focus on. As we talked about on our Investor Day, we basically have a retention of about 45% in this business. 60% of the attrition each year is due to onetime user. The other 40% we can control. It's a very hard aspect to move because we've got this large, dispersed base around the world with 400,000 agents, but what we've been working on is recently we've launched a few different product innovations. We've launched one-step refund. This allows for our agents to be able to do a refund in a much quicker pace; rather than, in the past, they had to call in to our call center. 20% all of our calls came from refund calls from our agents. Now we're getting about 50% of the refunds done without calling in to the call center, which is speeding up both the agent's time as well as our customer's and relieving us from the call center. We've also launched a couple of products around Quick Resend, which remembers the last 5 transactions you've sent. That way, when you walk into an agent location, they'll say, "Hey. Do you want to send it your mom?" You say yes. "Same amount?" Yes. Boom, it's gone. It speeds up the process by meaningful amounts, cutting minutes off the time. And the other one is "remember me," which pulls up all the data about you when you come in and provided one of several different data points, versus having to provide all the data over and over again. Things like that are going to continue to help us improve our customer retention, as well as we've now pivoted the company from being focused historically on a transaction basis to a customer basis. And we've spent a lot of time with our call centers and working on how do you really drive that customer focus. How do you move away from trying to drive each call time down but rather actually first-time resolution? And those are the kind of things that are going to make our customers happy and make them stay with Western Union.

Yes. I mean, can you double click on that, the transition from a transactional to an account-based system? It sounds easy in practice, but I'm sure it's much harder to turn the ship. I mean, what does that process look like?

It's really been we've -- internally there's all kinds of tech terms; and I'm sure, even for other companies. I'll try to leave those out, but we've gone through and we've mapped out the elements across our different platforms. And we're using -- no help through this company, but Snowflake is helping us, where we bring all the data together. And we're able to look across our different processing platforms, both digital and retail; and build to understand that Will has done 2 transactions at the local Kroger's and 1 at Walmart's and 5 online -- and brings it all together. We're still in this journey. We're still not done with it, but we're making great progress so that our call centers can treat you like a customer. You can see the history of what you've done with us. And we can treat you a little bit differently when you're an active customer that spends a whole -- a lot of money with Western Union.

Right. The physical distribution of Western Union is one of the company's greatest assets. I mean I think optimizing part of that network was one of the key pieces of the Evolve '25 retail strategy. Could you talk about where we are and some of the distribution components of that strategy?

Yes. And just to clarify that one. So we historically, the company, talked about 600,000 agent locations. That was all locations, whether they're active or not. We also used to disclose the number, the percentage that were active. The fact that we have 400,000 now is about the same number we had before, so it's not that we cut away 200,000 active locations. We just basically closed down and shut down inactive locations that causes broader risks or other obstacles in our compliance program. That's the main change there, but beyond that, we've also done a whole lot of work on how do you get the right agent locations -- right agents in the right locations. And the reason why we want to move away from total agent count to active locations is because we wanted to pivot the company to what is a productive agent. And we've done things such as -- we talked about this at our Investor Day last year, in October, but we rolled out a block analysis approach to help our salespeople. And this block analysis looks at basically 1.5-square-mile radiuses, looks at what the diasporas are in that area, helps the agents -- or helps our salespeople pick the next agent locations and giving them suggestions for just speeding up their sales process. We've also rejiggered our sales commission program so that our sales folks are compensated not on planting new flags and signing up more accounts but rather actually signing up agents that are going to be productive so, when Western Union and our shareholders make money, that's when our agents -- our salespeople make money. So those are some of the things we've done around productivity.

And then I guess on the -- you touched a little bit on corporate stores at the Investor Day. How are you kind of deciding? Or what's your vision for kind of the first-party distribution going forward?

Yes. So our still principal path will be third-party stores. We've got an affinity towards exclusive agent locations, but we do have around 600, 700 company-owned stores around the world, largely concentrated in Latin America, a handful in Europe, 2 handfuls in APAC. And we're looking at a few here in the U.S. The main reason for moving into company stores or having company stores is it allows us to control the entire end-to-end experience for our customers, allows us to test different product innovations, helps us drive the retail-to-digital escalator, so we love our company stores, but it's not going to ever be a big percentage of our base. I mean you're talking 600, 700 out of 400,000. We also, though, launched this past year a similar concept called concept stores. Concept stores are a Western Union-branded store. We do not own it. There's a little bit more capital intensiveness in setting up than a normal agent, where you just sign the paperwork, give them a couple of signs and they go, because we're helping them put it in black and yellow. It will feel like a company store. So you're talking $10,000, $20,000 per store to set it up. It's an exclusively agent location. Their specs are much closer to the way we run our own company store versus you walking in and having T-shirts and CDs and every other thing, everything about someone selling. It's going to feel more like a financial institution when you walk in. We've got about 100 of those in Europe and they're doing very well.

Got it. Makes sense. You mentioned the retail-to-digital escalator. I wanted to maybe switch gears, talk about the digital business for a little bit.

Yes.

Maybe in the near term. I mean you said you expect to see the digital business flip positive in the back half of the year. Is that still the expectation in the near term? And beyond this year, how are you thinking about getting that business back into the double-digit growth rate?

Yes. Based on everything we know right now, we have a high expectation that North America will be positive here this quarter. The entire world will be positive in Q4. I have high-level confidence there. To your second part: How is that possible? I'm going to take a couple of steps back. If you go back to the evolution over the last couple of years, our digital business was growing at a double-digit clip throughout COVID, as people were moving away from retail outlets, into digital footprint. And during that time, we had high double-digit new customer acquisition growth. That started to slow as you got into '21 and then early '22. That then drove our transactions down in the latter part of '21 and going into -- and actually turned negative in Q2 of 2022, 1%. Since that point, we've been able to invigorate that through our Evolve strategy. And now we've driven 12% growth here this past quarter in our digital business. It's been done through a combination of new customer offers. We've changed out our marketing firm. We've segmented our customers into different tiers for how we keep them engaged. We're still working on this, but we're enhancing our loyalty program. We've enhanced our funnel so that -- we've actually tweaked a couple of different things. One is we've simplified the number of steps one has to go through to make a transaction, which the more steps you have, the more breakage you have. We've also put a little bit of marketing flair into it, the -- you'd go in there and it will show you what the historical price is but now actually the new so you feel like you're getting a good bargain, and you are. But it's a little bit of an optics thing there to help understand there's a fair price. So there's been a litany of things we've done in this business that's helped us drive double-digit new customer acquisition over the last couple of quarters and then the 12% transaction growth this past quarter.

Got it. And then just over time, the transition back then to double-digit growth.

Yes. So our goal coming out of the Investor Day last year was, by the end of that 2025 period, we get back to double digit. We're pretty optimistic that may come a little faster. We've got -- we're probably about 3 to 6 months ahead on our evolution right now in the transformation for digital.

Got it. It sounds great. Maybe bringing it back to that longer-term strategy. You've talked about retail as the gateway to Western Union, stabilizing retail and creating a retail-to-digital escalator, a big part of the strategy. Could you talk about that escalator? How does that work in practice? How long does it take for a new retail user to start using? And then maybe what does that mean from a unit economics perspective, to have an omnichannel customer like that?

Yes, perfect. Just if you step back: What is an omnichannel client? This will be someone who's done a retail transaction and a digital transaction in the past 12 months, based on the definition we use. We had highlighted on Investor Day that a omnichannel client is generally going to do about 2.5x more transactions than a normal client. And they're going to produce about 2x more revenue than just an average normal client. Our strategy here is that we're going to get 20 million to 25 million new retail clients every year into a retail location. We also through some research have discovered that about 2 million of our clients that we trade every year -- that 40% of the 90% actually leave us and go to one of our digital competitors. And through this research, we discovered that many of them had no idea that we had a digital solution. That's because the way Western Union historically had managed this was we had kind of a Chinese wall, treated them as 2 separate businesses and didn't really integrate them, so what we've been working on over the last 6 months through the year is how you bring them closer together. Part of our goal of bringing to a customer view and helping you as a customer understand all of the moving parts of where you transact with us is [ a healthy interchange ] on both sides. We've -- also are working on a solution called track a transfer, where you can track your transaction. When you do that tracking, you have to log in to our website even if you're a retail client. Well, that will then help introduce you to the fact that we have a solution, and you'll see other aspects of it. One thing that we're trying to be very careful of, we don't want to cannibalize the retail business. We -- our agent partners are very important to our relationships and our business, but we're also working on ways that we can make a bilateral activity between the two sides to make sure it's a strong relationship going forward just -- versus poaching all their clients our way.

Makes sense. And you -- I think you've talked a little bit about agent incentives to get customers pointed towards the digital business. I mean, what does that look like? And I guess -- and where are we in that process?

This one has been -- so holistically, this is probably one of the slower initiatives we've had. We feel really good about the retail side, really good on the progress on digital. This is one we've been still testing. It's one of the reasons why we're starting to put more stuff in our company stores. We've tested a few different incentives around the world. Some have worked. Some have not worked. And we're still exploring that.

Got it. Makes sense. So there's been this philosophical change transitioning towards more of a customer view instead of a transactional view. With that comes the focus on unit economics, metrics like LTV-to-CAC. How are you thinking about unit economics in the business now and kind of where you want them to be?

Yes. So as part of our launching of the new go-to-market strategy last year, in August, we really have been pivoting the company away from that transactional lens to a customer view and LTV-to-CAC you just highlighted. We've made some pretty good progress on this, so since we've launched that, we've noticed that our retention rate for new customers coming in through the promotional pricing has been generally in line with the promotional curve in the first 3 to 6 months post go live. It's still obviously early days. We've also been able to -- as we talked about in our Q1 call, we've been able to reduce our CAC by about 20%. This is not because we reduced our spend but more so because we've increased the number of customers. And we'd normally do it through the same amount of spend.

Yes.

So when you look at holistically our LTV-to-CAC. It's been largely flat because you've given away one transaction. You've reduced your CAC by about 20%, but holistically we're pretty comparable to where we were before but doing it on a much larger new customer base.

Yes. Makes sense. And I guess, on that note, I mean, the competitive environment is always in focus here. You guys are definitely seeing a lot of progress and improving customer acquisition costs. What are you seeing on the competitive front? And I guess, are there any pieces of that, the 20% improvement that you talked about, that are more environmental versus more things that are within your control? And maybe, how do you think about the ad spend environment?

Yes. It's been an interesting one. When we started this journey, we weren't sure how competitors would react. And obviously it's been ongoing now for about 4 quarters, been more holistic rolled out for now about 2 quarters for our digital side; and obviously we've made some progress on the retail as well. And we have not seen a massive change in how our competitors have been reacting. You still see price reductions. You still see price increases. You, like me, listen to all their earnings calls. You can see that some of our competitors have slowed down a little bit in their growth rates, while we've accelerated. You've seen one or two still continue to do amazing, so I think that the reaction to what's going on has been either delayed or muted or hard to execute because there's an expectation on profit on all of us. And it's also a lot harder to get capital in this market right now than it may have been a couple of years ago where you could easily do irrational things with low level of pricing. So we've not seen a ton of massive movements, anything that's been different than before these changes.

Got it. Makes sense. And maybe to pivot a little bit to the ecosystem: You're increasingly looking at an ecosystem strategy to provide financial services to your global customer base. Maybe you can talk about that vision over time. And what have been the learnings from the initial rollout in Europe?

Yes. So we started this journey. I guess it was probably Q1, Q2 last year. We launched in 2 different markets. I believe it was Romania and Germany. And then since then, we've gone live in Q4 in Poland and Italy. The biggest learning we've seen through the first 4 wallet launches -- and I'll expand on that in a second, but what we've seen is the customers that are active with us are about 2 to 3x more active than they were if they were not ecosystem clients or they're just a normal retail or digital. We've also learned that -- when we launched this, we launched a second app for the wallet separate and distinct from the westernunion.com app. What we've learned is that it makes it a little harder to get people to convert over versus a one-step upgrade, so as we go live in future countries -- and we'll work our way back to the ones we're already in. The U.S., when it goes live later, will be a 1-app solution, not a 2-app solution, trying to get rid of that friction that we had created in the first pilot. We've also learned that there's really 3 groups of clients. There is a group of clients where you have your existing active retail and digital clients. You've got your dormant clients that used to be a retail or a digital client. And then you have neobank clients, whether it be new bank or you pick your favorite neobanks. The first 2 groups, we love. The first group is coming in. They're being a little more active than our existing base. They're storing money. We can make interests. They can make interchange. They're doing more activities than they were when they were just a -- exclusively MT clients. The second group is net new. We've lost them a while ago. Maybe we could have them reengaged in the remittance process, but they left us because they needed a different solution that we didn't have. Now we've got a solution to bring them back in the fold. And the third group, we've realized that the LTV-to-CAC is not good for us. And we focused our marketing dollars on the first 2 groups, not really the second, which is also one of the reasons why a single app for us will be much better because it will allow you to upgrade your current digital clients into the wallet rather than trying to go market to them and get them to come in.

Yes, makes sense, yes. I think just on the topic of kind of tech enhancements. I mean I think a big part of the strategy, at Investor Day, was to consolidate a lot of the operating platforms into kind of fewer systems easier to innovate on. I guess, where are we in that process? And what's the road map there?

Yes. So the biggest focus on that one we were talking about is we were launching a couple of different things. One is we were -- for our westernunion.com app, we were trying to move to 6 regional apps. We've now launched that in 5 countries. We've got it here in the U.S. and -- or North America and Canada. We've got it in APAC and Australia, and then we've got in a couple of different countries in the Middle East. And our goal there as we roll them out is to have a regional patch so typically the KYC rules and the different approaches are more regional in nature. So you go away from having 50 apps to having 4 to 6 apps around the world. That's in process. The biggest win we'll have this year is mostly in the Middle East who have migrated over to this new app. There's various other reasons why we're doing the Middle East [ in this pace ]. We're also doing a similar approach when we're doing the ecosystem. We're working on these regional-type approaches, but there are some variability with how KYC works, like Mexico. Mexico requires you do video KYC. Most other countries don't require you to do that, so there'll be a little bit of deviations, right, country to country.

Yes. That makes sense. So I guess, within the ecosystem, what are the kind of top new products that you're thinking about launching or that you think could be most adjacent to the existing...

Yes. So within the wallets we have today, we've got the ability to store funds and earn interest. You can do it in a multitude of currencies. It depends on whether it's the U.S. app, about to take live, or whether it be the European ones, but call it 7 to 13 different currencies or so. You also have the ability in certain markets to be able to buy and hold crypto. We actually are working on a new prepaid card, which I think Devin talked about in the last earnings call. So this is right now in friends and family here in the U.S., so if you want to be our friends, come on up and Tom can help you get a friend a card. Tom, you can get it for Will. We're also piloting right now. And then the goal, when this works and is starting to see some really good early indications, is we're doing a partnership on lending both in Argentina and in Australia. And when that works, then you can easily plug it into your ecosystem and have people have direct access into a short-term lending solution through different partners not on our balance sheet but off balance sheet, but the goal is to think about all the possible financial services someone may need. And the high points are typically debit card, prepaid card, credit card, lending. And then you start getting to other things of insurance and so forth, but it's working your way around that financial ecosystem for folks.

And does that differ between sender and receiver? Are there specific products that you think are more applicable to the receiver population?

I would say that most of them are similar, other than the remittances. Once I want to catch it. Once I want to send it, but one of the things that we're really excited about is on the receive side. In Romania in particular, we've been testing how to get people to send funds in and have a receiver in Romania actually load into the wallet rather than having them go pick up the cash. The benefit for us is we can save on the commission expense. Two, you get a lifelong customer, hopefully, or at least a customer for a period of time where, before, they put the cash up and Western Union was out of their mind. And that didn't get them in there; and they started possibly doing a prepaid card, a debit card, top-up, those kind of things.

Yes. Makes sense. So maybe one on just investments: And you already mentioned you're feeling like you're ahead on the Evolve '25 strategy. There have been some sources of upside this year. Iraq, I think, was one. You've talked about, to the extent there's upside to the guidance, you're looking for areas that you can accelerate or reinvest in the business. Across all of these initiatives that we've talked about today, where do you kind of feel like is the next best opportunity to invest?

Yes. So we intentionally -- in our last earnings call, we kept our guidance for margin at 19% to 21%. We did that because, while we were at 21.4, I believe it was, for the first 6 months of the year, we wanted to have some flexibility in the second half of the year. Principal focus areas we wanted to have is -- we've been working a lot with Bob, our -- Rupczynski, our Head of Marketing. He's been here now 1 week longer than me, so it's been 13 months and a week, I guess. And he's been the -- really the catalyst and his team has been the catalyst on our turnaround for digital, but we've been working on how linear is our CAC. And we've been doing a whole lot of testing on that. And once we get a high confidence that, as you spend more dollars on it, you can actually get more customers at a reasonable CAC, we wanted to have that flexibility to pour some more money into there. So that's one of the areas that we've held back and want to have some flexibility on in the second half of the year. We also wanted to have some flexibility on other products expansion. We always look at can you buy something. Can you build something? And having that ability to accelerate and get some consulting advice, get some development advice and that kind of stuff is always helpful to have.

Yes, no, that makes sense. So you mentioned the margin target 19% to 21%. I guess, beyond the balance of this year, how comfortable are you operating in that range? And is there anything to call out?

Yes. We feel very good [ in kind of ] that range. We intentionally put a 200 basis point range for flexibility from any given quarter any given year. We felt like there's enough opportunity to move expenses around within our company to easily stay above the 19%, but we felt like the upper end, 21% -- obviously Iraq a little bit of a surprise and we're -- a pleasant surprise to put us above it, but otherwise, we feel good about the range.

Got it. Makes sense. You mentioned the Iraq component. Any update? I know -- I think, at the time of earnings, there had been, I think, a 70% drop off in those volumes, so any updates or anything to call out as we sit here in early September?

It's probably the only reason why there are so many people in this room. It's that, all day long, I told them I wouldn't tell them when private, but I will tell you in public...

Thank you.

Yes. So for just recollection for everybody: Iraq started back in March. The U.S. Fed, New York Fed and CBI changed the rules back in Q1, which made it more challenging for Iraqi banks to send cross-border remittances. It basically took them from being able to send in a couple of days to taking over 30 days. When they did this, there was discussion between the 2 parties that people may come to Western Union or other providers that have better KYC processes in place than the banks did. And that would allow us to send at a more rapid pace than they could do, so that thing gave us a benefit in March through middle of July. In July, the New York Fed came out with a ruling that basically 14 banks in Iraq could no longer be part of remittances. Some of those banks were partners of ours, so we had to shut those partners down. At that point, that did lower us by about 70% versus the average run rates in the previous quarters, when we think about that. It's still a very fluid situation. We know that the New York Fed and the CBI were planning on meeting in late August and talking about how can they then reopen the banking system. Obviously there's a demand and a need for Iraqi citizens to go send money cross-border. We've not gotten an update on that. Labor Day was a couple of days ago, but takeaway is it's still running about the same level as it was for during that 5-day period, so view it as a 20% to 30% per day and bounce around from day to day. But somewhere in that 20%, 25% range is where we got it right now.

Got it. Makes sense. And so I guess, when you think about -- I think you said some of the upside from that was reinvested into things like operations and compliance. Are there any kind of potential adverse impacts from this like a lot of money flowing into that country? I know it's always a big focus. You guys spend a lot of money on compliance, but anything on the radar right now?

There's nothing on the radar. We, from day 1, started collaborating with the U.S. treasury and the U.S. Fed on this, meeting with them on a weekly, a couple times a week sometimes, basis, sharing what we were seeing. They were sharing what they were seeing but to a lesser extent, like a government would do. And when they shared with us about turning off the 14 banks, one of the questions we asked was, "Is there anything we could have done or should have done with those 14 banks that you guys were seeing differently?" And the feedback we got was, "No. You have been very collaborative. You've shared a lot of data for us. We have insights you do not have. That's why we're doing this." And they actually apologized because we met with them the day before they did this and they didn't tell us. So does that mean there's never a risk? We feel like we've done all that we can do. We feel like we've been as compliant as possible, as collaborative as possible, but you can never say never.

Sure. That makes sense. So maybe switching back to kind of market trends: There was some talk around promotional pricing at the time of the Analyst Day, but what have you guys done on the promotional side? I mean, for a long time, the investor concern around remittances was around falling barriers to entry and lower take rates. Where are we on that journey? How does Western Union compare now? And do you see any major shifts in pricing as you look out?

Yes. So we don't see any major shifts. I mean obviously what we launched was -- in the digital business, we introduced the introductory pricing. It's basically first time free or some other discounted price of -- with that. We've also adjusted, in certain corridors, to market-based pricing to be as competitive as possible to maximize LTV-to-CAC but wasn't major movements there for that secondary change. And then the other thing we've done is we've done a little bit with the upside we've had from Iraq. We've done a little bit of retail price elasticity testing but to very modest levels, just trying to understand where else can you maximize long-term value versus short term, but if you look at the holistic yield, it's not moving [ down ].

Yes, no, that makes sense. And maybe one on capital allocation: I mean you've historically had very attractive capital return. Just remind us how you're thinking about capital allocation over the next couple of years.

Yes. Very consistent to our historical stance, very committed to our dividend. We do recommend to everybody in this room it's a very strong payback [indiscernible] debt or anything else. Today, it's 7%, 8% yields, with a lot of upside when we make this keep working. Second priority for us is strategic M&A. We've been looking at lots of things over the last years that I've been there, but nothing has been spot on point what we want for the right multiple. Things have been a little bit frothy still from an expectation standpoint. And then ultimately if we find no strategic M&A that makes sense, we'll then return capital to our shareholders in a friendly way through share buybacks.

Yes, makes sense. Any questions in the room? I've got 1 or 2, but I just want to double check. No. Maybe just double clicking a little bit on M&A, I mean, what are the types of assets that might make sense within Western Union?

There's really 3 groupings we look at. I'll work my way up from least interesting to most interesting, so I end on a high note. The first grouping is if there was a retail player that would add a technology stack or some market that we may not have the right corridor play in. We've looked at lots of things there, but typically it's -- might come with some compliance headaches, adds an extra set of technology that isn't better or different enough to justify it. And they don't go and make sense economically, but if there -- the perfect thing came -- we look at everything that comes from the market, but you've got to see what makes sense. The second one would be similar type thinking on digital. So if you had a corridor player or even a larger player that would help us with functionality that might be not as strong as some of our competitors' or if they had some corridor where they were stronger than we are, we'd be very interested. We're already in 50 key markets around the world. So many of our competitors are not in as many markets, so they have to be some niche places where they might be better than us. Or some product innovation. And the core focus area for us is going to be how do you expand the successful financial services. What can you do from a product or a service standpoint, whether it be through prepaid cards, whether it be through maybe a lending partnership, early wage access, things of that nature? Those are the things that we generally are more interested in and excited because it helps you build out the ecosystem.

Got it. Makes sense. And just the last minute here. As you look out kind of over the next 12 to 18 months, what are you kind of most excited about? What do you see the most traction? And where are you spending the most time thinking about today?

Yes. So for me it's probably on the ecosystem side. I think that the first two are starting to trend in the right direction. We can see line of sight to get stability on the retail side during the time horizon. We can see getting back to double-digit retail -- or digital growth. On the ecosystem, there are so many different opportunities and choices you can make to build that out and have the right solution set. It's probably the place with most excitement and also the most focus.

Got it. Makes sense. Well, that's all, I think, all the questions we had. I appreciate you taking the time.

Awesome, Will. Thank you very much. I appreciate it, yes.

All right, thank you.