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

Good day, and welcome to the Western Union Second Quarter 2026 Results Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Tom Hadley, Vice President of Investor Relations. Tom, please go ahead.

Thank you. On today's call, we will discuss the company's second quarter and our 2026 full year outlook, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our CEO, Devin McGranahan and our CFO, Matt Cagwin. Today's call is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2025 Form 10-K for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. Where possible, we have reconciled those items to the most comparable GAAP measures in our earnings release attached to our Form 8-K as well as on our website, westernunion.com, under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan.

Good afternoon, and welcome to Western Union Second Quarter 2026 Financial Results Conference Call. In the second quarter, we continued to face significant margin pressures due to the ongoing slowdown in the retail business in the Americas, higher agent commissions and the continued acceleration of our digital payout to account business. The quarter came in $0.06 better than Q1 having eliminated many of the onetime effects we saw in the first quarter. However, the accelerated shift from cash payout transactions with higher revenue per transaction, RPT, and higher contribution profit per transaction, CPPT, to pure digital transactions continues to weigh on profitability. On a more positive note, despite the strong macro headwind, our strategy and our significant geographic diversification enabled us to report revenue of $1 billion. On an adjusted basis, this was a decline of only 1% year-over-year. Consumer money transfer transactions grew at 3% in the quarter, which was a 300 basis point improvement from Q1, a 600 basis point improvement year-over-year and the highest transaction growth rate since the second quarter of 2024. We continue to see quarter-over-quarter improvements as we lap the worst of last year. For example, U.S. to Mexico declined a little over 3% on a transaction basis in the quarter a nearly 1,000 point improvement year-over-year. Yet overall U.S. retail continued to be mid-teens negative on a transaction basis in the second quarter, well below our expectations. While overall global transaction growth has improved significantly, it is important to know that it comes from lower contribution profit per transaction, which is putting pressure on our margins. Adjusted earnings per share came in at $0.31 in the quarter compared to $0.42 this quarter a year ago. This is below our expectations and is driven by lower profitability in our Americas retail business and lower profitability in our Middle East business as volumes there continue to shift rapidly from our legacy partners in the region to newer digital-only partners at lower RPTs and profitability. Our branded digital business continued to perform well with transactions increasing by 25% this quarter and adjusted revenue by 6%. While transaction growth continues to accelerate, the revenue growth is being muted by strong growth in lower RPT corridors and a significant increase in digital payout to account which saw 55% growth in the quarter. As I mentioned in previous calls, our new customer acquisition economics remained challenged in the quarter which impacted the overall revenue growth and profitability of our digital business. We continue to roll out our Beyond Digital platform, which I believe will enable better customer experience improve our ability to market at a corridor level and potentially reduce the magnitude of needed new offer incentives. In Consumer Services, adjusted revenue was up 12% in the quarter, driven by growth in our bill pay business as well as continued growth in Travel Money. Our financial results in this quarter came in below our expectations for the second quarter in a row. This is not acceptable, and we are not satisfied with the current operating performance and we'll be implementing significant changes as a result. While the external macro factors over the past 12 months have undoubtedly accelerated the underlying trends in the business, we recognize that in the near term these trends are not likely to -- are likely to continue at elevated levels. We have been navigating this mix shift away from payout to cash over the past several years as well as the move from retail to digital through cost savings initiatives and the reallocation of investments. The impact of ongoing changes in immigration in the Americas has accelerated those dynamics, and we must now more aggressively change our cost base to reflect the reality of a future with continued pressure on CPPT. Over the past 12 months, we have seen the percentage of payout to account and pay out to wallet transactions grow by 25%. This is an important trend that will likely continue to cause ongoing margin headwinds unless we vigilantly reduce our fixed cost base, lower our account payout costs and increase our ability to cost effectively drive digital growth. We have spent much of the last 8 weeks evaluating what is working across three -- these three dimensions and what is not. That process has reinforced our belief that the long-term fundamentals of our business remain intact. Our brand, customer relationships, market position, scale and digital capabilities continue to provide a strong foundation upon which to build. However, a strong foundation alone is no longer enough. We must accelerate the transformation of our operating model to enable us to maintain our ability to invest in our next-generation digital initiatives while simultaneously significantly lowering our ongoing operating costs. The program we have launched is called Beyond Efficiency. It has five key program elements, and we will be targeting a run rate operating cost reduction of $50 million by the end of the year. The five key program pillars include: the first pillar Accelerate the Dual Track strategy by reducing redundancy and streamlining processes that do not align with the Beyond strategy. As a 175-year-old company, we have a lot in the garage. Organizations build up over time and what were once new ideas or areas investment are now ongoing operating costs with limited or no contribution to the Beyond strategy. For example, as we move to the Beyond Digital framework, we have made the decision to close down our existing digital wallets in Europe, saving the company a run rate of $6 million to $8 million. We anticipate launching our Beyond Digital platform to replace those in Europe by the end of the year. The second pillar is to reduce discretionary operations and technology work by 20% that is not directly tied to growing digital. We are targeting a 20% reduction in discretionary operations and technology capacity by the end of the year, forcing a prioritization that will cause only the most impactful initiatives to get work done. The third pillar is to rapidly adopt AI to drive automation and reduce manual work given our legacy system limitations. We have ramped up our adoption of AI and other automation platform significantly over the past 6 months, and we see meaningful opportunity to eliminate manual work and reduce the friction that results from our large geographically dispersed and highly regulated business. The fourth pillar is to move to a more aligned operating model. As part of our Beyond Efficiency program, we are looking to align people and work closer to the region they support. This will require us to localize what today are distributed global functions. For example, we have been moving agent onboarding for the Asia Pacific region from Lithuania and Costa Rica to our operating center in Manila. This will improve time zone and geographical alignment and reduce unit labor costs. We anticipate this will improve on all three dimensions of cost, quality and speed. The fifth pillar is to reduce the operating cost of moving money. In a world that is rapidly going to digital payouts, we must reduce the cost of capital that we have floating around the system, lower payout costs improve FX rate competitiveness and accelerate real-time settlement through our own digital currency, U.S. DPT. These initiatives are focused on creating a leaner organization while maintaining our ability to invest in the areas that matter most strategically. Importantly, this is not a short-term exercise, designed solely to reduce near-term costs. Rather, it is a structural effort to improve how we operate and to position the company for stronger, more sustainable profitability in the years ahead. We understand that our investors expect tangible evidence that these actions are producing results. While meaningful transformation takes time, our expectation is that the combination of improving growth and enhanced cost discipline will strengthen margins, improve profitability and increased returns over time. Our objective remains straightforward, generate consistent growth, improve operating profitability, strengthen free cash flow generation and create long-term shareholder value. I look forward to updating you on the progress of this program in the coming quarters. Now switching briefly to the macro. As you know, remittances in the Americas have faced meaningful pressure that began in late 2024, driven by the changes in immigration policy. While growth rates have improved meaningfully from the summer of 2025 lows and continue to improve, with U.S. to Mexico, for example, revenue growth rates improving 500 basis points sequentially compared to the first quarter. Retail continues to underperform relative to digital, and that dynamic continues to weigh on the profitability of our Americas businesses. As we have discussed, the growth in retail business is almost always dependent on new migration. When immigrants come to a new country, most frequently, they transact in retail out of necessity, given cultural and language issues, lack of access to digital funding and often heavy cash remuneration. When migration goes negative like we have seen in the U.S. and around parts of the Latin American region, it becomes difficult to replace customers that migrate to digital channels, find alternative options or leave the country to return home. This doesn't mean the retail business can't improve like we have seen over the last several quarters. It just means it will be difficult to get the business back to true growth without a meaningful change in immigration policy or much more aggressive gains in our market share. We do believe we can take market share, and we should start to see the benefits as Canada Post and Deutsche Post ramp-up, which will provide a tailwind starting in Q3 and continuing in 2027. We also recently launched an industry-first partnership with Total Wireless a Verizon value brand that combines wireless connectivity and cross-border money movement. The partnership expands our reach into the telecom channel, providing access to millions of subscribers through thousands of retail locations and extending our distribution footprint across both digital and retail channels. Recognizing that consumer behavior continues to evolve and digital engagement is becoming increasingly important across every aspect of the customer journey. We believe our digital-first strategy and our digital platforms represent the most attractive growth opportunities over the long term. Over the last couple of quarters, we have seen substantial gains in the Middle East, while our digital business in other parts of the world has plateaued. We spoke on the last couple of calls about needing to better manage promotional offers in places like the United States and Europe. And as such, we have begun to pull back. While the benefits of this more disciplined approach are not immediately obvious in this quarter's results, in the last few months, new customer growth rates have improved and have done so at higher RPTs which should bode well for better revenue and profitability in future quarters. That said, pulling back on new customer incentives is just one element of our revised approach. Since our Investor Day, we have been executing our digital acceleration program along 3 axes. The first is the restructuring of our digital go-to-market model and team. We have now completed the restructuring of our go-to-market team, moving digital team members into the regional operating units that they support. This now brings decision-making and local market knowledge together in one team. We have also been adding new senior digital talent with sector expertise across the regions. In particular, I would like to welcome Shishir Singhania who joined us last quarter as our new Chief Digital Officer, leading the global digital product team and the North American go-to-market team. Shishir brings deep knowledge and experience to us and has already begun to make material impacts. Second, we are accelerating our Beyond Digital platform. Having now seen early returns, we are accelerating the rollout across our major markets with planned launches in Australia, Europe and the U.S. before the end of this year. We are expecting the Beyond Digital platform to enable us to improve new customer onboarding success rates and thus improve the return on new customer acquisition in these important markets. We continue to target rolling out the Beyond Digital platform to all of our major markets by the end of 2027. Third, we are focusing on investments by corridor. Our analytics and insights have improved, and we've begun to differentiate our level of new customer investment in both marketing and new customer incentives at the corridor level. This higher level of fidelity and targeting, we believe, will enable us to earn better returns on the same overall investment pool. Even if it means slowing down in some larger corridors where competitive dynamics inhibit strong returns. Before I turn the call over to Matt, I would like to discuss further, a few minutes to provide an update on our Digital Asset Strategy and the progress we are making. At the center of this strategy is USDPT our U.S. dollar stable coin. USDPT is designed to maintain a one-to-one value with the U.S. dollar and is backed by reserves, including cash and U.S. treasury instruments. First, we successfully launched USDPT in May of this year, which established the foundation for a regulated digital dollar that can support payments, treasury operations in customer use cases across our global network. USDPT is now live and available through an expanding ecosystem of exchanges, financial institutions and partners. With the first four exchanges now live and actively trading USDPT. Second, we have introduced our treasury bridge solution which utilizes USDPT to support more efficient movement of liquidity and capital across our global network. This initiative has the potential to enhance funding flexibility, improve settlement speed and reduce reliance on the traditional correspondent banking infrastructure. We are testing with multiple counterparties to use USDPT as a form of settling our cross-border money transfer transactions. Third, we launched the Digital Asset Network, or DAN, which extends Western's Union's unique global distribution capabilities to the digital asset ecosystem. Through DAN, digital assets, exchanges and other partners can connect to Western Union payout infrastructure enabling customers to convert digital assets into local currency and access funds throughout our global network. This creates a bridge between the rapidly growing digital asset economy and the real world economy that customers can use every day. We have successfully launched our first partner and we expect the launch of several more in the coming weeks with the goal of having tens of millions of consumer digital wallets connected to our digital asset network by the end of the year. And lastly, we continue to advance our consumer proposition with the development of our USDPT powered wallet and card capabilities. Our vision is to provide customers with the ability to redirect remittances, hold the USDPT digital dollars and spend them through a payment card seamlessly transitioning between digital assets and traditional financial services. We are launching the USDPT stable card today. We view the digital assets as an opportunity to expand our TAM and to free up capital. Our objective is simply not simply to participate in the digital asset system, our objective is to leverage Western Union's trusted brand, regulatory expertise, global reach and distribution network to become a critical infrastructure provider within that ecosystem. What differentiates Western Union is that we are focused on real-world utility. We are not building speculative products. We are building solutions that address practical agent and customer needs, faster settlement, lower friction, improved accessibility and broader financial inclusion. While we remain in the early stages of this journey, we are encouraged by the momentum we are seeing, we have moved beyond strategy and are now into execution. 2026 will be a foundational year for our digital asset initiatives. We have successfully launched the core building blocks of this ecosystem and our focus now shifts towards execution, adoption and scaling. We remain confident that digital assets, stable coins and block chain-enabled payments can become meaningful contributors to Western Union's future growth and reinforce our mission of making financial services accessible to people everywhere. Before I conclude, I would like to give a quick update on Intermex. We remain actively engaged in discussions with regulators on the final approval. I remain optimistic that we will be able to obtain the outstanding approval needed. This would enable us to close the transaction upon receipt of this approval as well as satisfaction of other outstanding and customary closing conditions. In closing, while we are disappointed with our current results, we remain confident in our ability to improve performance and unlock the value that exists within this business. The path forward is clear. We are focused on driving growth through our digital initiatives, improving efficiency throughout the organization, allocating capital with discipline in executing against a well-defined strategic plan. We recognize that rebuilding momentum requires patience and execution. However, we believe the actions that we are taking today will position the company for a stronger future. We appreciate the continued support of our shareholders and the dedication of our employees who remain committed to serving our agents and customers every day. While there is significant work ahead, we are focused on delivering the results that our stakeholders expect and deserve. Thank you. And I now turn it over to Matt to review our financial results in more detail.

Thank you, Devin, and good afternoon, everyone. I'm going to walk you through our 2026 second quarter results in more detail and our 2026 financial outlook. In the second quarter, GAAP revenue was $1 billion, which on an adjusted basis was down 1%, a meaningful improvement from down 5% last year. The decrease was driven by continued slowing of our Americas retail business while our consumer services and branded digital businesses grew 12% and 6%, respectively. Adjusted operating margin was 15% in the quarter, which was impacted by lower revenue from our retail business, mix, higher agent signing bonuses and higher operating expenses. As Devin said, we are clearly not satisfied with our performance of our business this quarter, and we remain committed to driving higher operating profitability. We are in the process of accelerating our operational efficiency program beyond efficiency with the goal of taking out $50 million between now and the end of the year and $200 million of run rate by the end of 2027. The drivers of our Beyond efficiency program will be the five elements that Devin discussed earlier, which includes the additional scale that we'll get from our Intermex acquisition. Adjusted EPS was $0.31 in the current quarter. Adjusted EPS in the current period was driven by lower operating margin for the reasons I stated previously, offset by lower tax rate in the quarter. Our adjusted effective tax rate in the quarter was 14% compared to 16% in the prior year. The decrease in adjusted effect tax rate was primarily due to discrete expenses in the prior year period. Now turning to Consumer Services business, which contributed 15% of total revenue in the quarter compared to 6% in 2022. Second quarter's adjusted revenue increased 12% driven by the growth of our consumer bill pay business, Travel Money business as well as the addition of check cashing. As a reminder, the current quarter marks the anniversary of our eurochange acquisition, which was acquired on April 1 of last year. The Consumer Services segment's profitability was lower in the quarter, driven by lower operating profits in our Travel Money business, lower float income in our retail money order business as well as the delayed reduction in overhead due to the acquisition we made of a check cashing partner that we had planned to integrate with Intermex. Now transitioning to our consumer money transfer or CMT business. CMT transactions grew 3% in the quarter relative to a year ago. This was driven by continued strength of our Branded Digital business, which delivered 25% transaction growth in the current quarter. While retail trends in the Americas remained under pressure, the ongoing shift of digital continues to support the overall transaction growth and customer engagement. CMT adjusted revenue declined 3% year-over-year, reflecting the continued pressures in the Americas retail business, driven by uncertainty in the U.S. immigration policy. But this was a 300 basis point improvement relative to the first quarter of this year. The CMT segment's profitability was lower in the quarter due to revenue mix including declines in cash payout transactions, offset by lower profitability from digital payout transactions, which increased, higher commission costs associated with new partners and renewals and higher operating expenses. In the second quarter, our Branded Digital business grew adjusted revenue by 6% and transactions by 25%. This marks the 11th straight quarter of solid revenue growth. Consistent with the recent trends, growth was increasingly driven by our Middle East partnerships. While these channels continue to expand our reach and support volume growth, their economics differ from those of our traditional license business, resulting in a more pronounced gap between transactions and revenue. We continue to view this as a strategic trade-off that supports the long-term expansion of our digital platform. As a result -- as a reminder, we began to ramp the Middle East partnerships in late Q3 of last year. So we expect transaction growth rates to moderate as we anniversary these partnerships. Account payout transactions also continued with a strong momentum, growing at 50% in the quarter which is the strongest quarterly growth rate in several years. Turning to our retail business. Overall, the performance of our retail business was in line with previous quarters on a transaction basis, and a few hundred basis points better on a revenue basis. The business remains challenged in the Americas as U.S. immigration policy continues to weigh on our operating results. New migration is the lifeline of our retail business. With borders closed, it is difficult to offset natural attrition that comes from digital migration, industry competition, and reverse migration as consumers return home to their native countries. Looking ahead, we remain focused on strengthening our retail franchise with new agent relationships a vastly improved platform and better consumer experience. Now turning to our cash flow and balance sheet. We generated $214 million in operating cash flow year-to-date, up 45% versus last year, driven by lower cash taxes. Year-to-date, capital expenditures were $88 million or 65% higher than the prior year due to signing bonuses associated with recent agent wins and renewals. As discussed in February, we expect CapEx to be roughly $200 million this year due to new strategic partnerships as well as a higher renewal cycle. Moving to our balance sheet. At the end of the quarter, we had cash and cash equivalents of $920 million and debt of $2.7 billion. Our leverage ratios were 3x and 2x on a gross and net basis. As we announced a few weeks back, we extended our delayed draw bank facility until November. This preserves the financial flexibility while ensuring that we have the committed funds in place to support the Intermex transaction. As a result, post closing, we expect our debt-to-EBITDA ratios to be elevated by historical levels. In the quarter, we returned over $80 million to our owners via dividends and stock repurchases. We have decided to pause our share buyback program in order to maintain our debt-to-EBITDA ratio of 2.5x to 3x. Now moving to 2026 outlook, which assumes no major macroeconomic changes. Based on our performance year-to-date and our view on the remainder of the year, we are updating our 2026 guidance. We now believe adjusted revenue will be in the range of 4% to 6% revenue growth, inclusive of the Intermex acquisition. Our outlook assumes a September 1 close. From a modeling standpoint, we expect retail CMT to continue to improve throughout their back half this year. Digital CMT to be in a similar ballpark of recent quarters and Consumer Services to grow low single digit as we lap the eurochange acquisition as well as the ramp of a large travel money partner as well as rightsizing our underperforming products that Devin talked about earlier. Our adjusted EPS for the full year, we believe will be between $1.25 and $1.35. We expect the second half EPS to be better than the first, driven by new agent wins, back half seasonality, better revenue mix and the accelerated pace of our beyond efficiency program. Thank you for joining the call today. And operator will take questions now.

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

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

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

Yes.

Perfect. Yes, happy to drill into that a little more. Just a reminder, I know you know this, but our Q2 margins and adjusted EPS were 200 basis points and $0.06 better than Q1, but it's still a far cry from what we expected. Also, I'm sure, as you know, last year, we were able to reduce our cost of sales expenses by 3% in SG&A by 14, which helped us fully offset the revenue decline last year and help us grow operating income. As you dig into this -- there's really two major drivers that really stick out that we should talk about. One is the pace of our cost reduction. This has slowed from the reason I want to give you a context of last year. It slowed from where we were last year. We were able to rightsize many different departments, exit some programs in the first half of the year, that's gotten a little harder. We do have a very good strong pipeline, as Devin outlined, the beyond efficiency program, which gives us confidence that over the rest of this year and going into next year, we can exit with a run rate savings of $50 million and $200 million. The other part of it is revenue mix. We've seen a shifting of to lower contribution profit per transaction. I'll just give you a couple of examples. We're seeing the acceleration of our cash payout to digital in both the U.S. and the Middle East, both accelerating. And we see higher profit dollars per transaction from cash payout versus account payout. We're also seeing different results between quarters. You know this business is made up of tens of thousands or thousands of corridors and the economics very massively from each one. As you heard Devin talk about we've seen quarter-over-quarter improvements for U.S. to Mexico, which has also been talked about by the Bank of -- Central Bank of Mexico. We've also seen improvements in U.S. to U.S. and U.S. to Canada. -- but we've seen a deterioration quarter-over-quarter of U.S. really to the rest of the world. There's a few spots where it's shining. But as you know, the yields vary between the different corridors the improvements we've seen in U.S. Mexico come in a corridor where there's lots of competition, and the yields are much lower relative to the rest of the world, we have a much higher yield, and that's putting pressure on us. The other thing that's helped us grow and have some improvements in U.S. and Mexico is we've had some regional agent wins over the last couple of quarters that have ramped as the quarters have gone on. These have come at higher commissions per transaction to win them, but they are still very profitable deals and things we're excited to have. We talked about one of them earlier in the year with Vallarta, which is principally focused on customers that are Latin America based with a very heavy concentration of Mexicans.

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

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

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

I just wanted to maybe circle back to the mix shift in the transactions that you're seeing in the quarter. I mean if I'm hearing correctly, it sounds like from a revenue perspective, the kind of the improvement in some of the larger corridors have offset deceleration in some of the other corridors. And then when you look at the contribution margin per transaction, the accelerating quarters are just lower than the decelerating corridor. So I guess I just want to make sure we understand that dynamic, but maybe more importantly, it seems rather sudden the acceleration in some of that mix shift that's happened. And so I'm just wondering if you can point to anything specific that's driven that acceleration because it does seem to be happening at a really accelerated pace for your comments and -- and I guess for some of the numbers that we're seeing in terms of like gross margin this quarter?

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

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

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

Will, thank you for the question. As you know, the yields and the pricing, the profitability vary massively from quarter-over-quarter. So we can give some generalities. But the real pressure here is we're seeing vast majority of our branded digital growth coming from our Middle Eastern partners, which come a very, very low revenue per transaction, thus very low profit. So that's causing part of this. As we -- Devin talked about in the prepared remarks, we've strengthened the team through multiple elements of new people, some of the things we're putting in place, the go-to-market. They're taking it from -- to market to our customers. As those things take hold, which we're starting to see early glimmers of this with getting revamping our core branded digital customer growth, that will help us grow more profitable branded digital in lots of countries. So really it's being driven by the fact we Middle Eastern partners are very low RPTs and profit per transaction. Beyond that, you also have just the mix, which varies because we have some corridors where digital payout might be a little higher. So it's hard to give any other than just generalities. The key for us is we've got to get the overall growth humming and then see and drive improvements in the Americas from a retail standpoint.

And so what I would add, Will, right, if you remember, and it's generally -- again, Matt's right, it's quarter-to-quarter. But in general, as a percentage, digital transactions are roughly margin-wise similar to retail transactions. Total dollars, and as I was talking about, contribution profit per transaction is reasonably different. And so when you start substituting the retail transactions, for the digital payout transactions, like I was talking about in Colombia, that's where you start to see some of the margin pressures that we're seeing. We do have two levers that we're working on. Matt highlighted one, which was growing higher revenue and higher contribution per transaction particularly in our digital business. The second, the team is working on quite aggressively is lowering digital payout costs. So many of our digital payout partners and networks were negotiated 2, 3, 4, 5 years ago in some cases. Some were part of our retail network, and we use them as payment switches to reach other banks or other wallets. And so we're in a pretty active campaign. And if you remember, we talked about at Investor Day, our goal of lowering those payout costs. This has brought that more to the forefront. And we will share in upcoming calls the progress that we're making. And that Colombia example, the team recently lowered the payout cost from over $2 to less than $0.50, right? And so the contribution per profit on those Nequi Wallet is going to go up dramatically. But previously, we saw a lot of volume shift, and we were paying similar payout costs as we did to other options in Colombia, even though they had lower revenue per transaction because they were digital.

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

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

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

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