The Western Union Company (NYSE:WU) Q4 2022 Earnings Call Transcript

Devin McGranahan: Yes. So Darren, it’s great to hear you. Thanks for joining the call. We are excited about the work that first, we did in the U.S. and now we’re starting to see similar, although a little bit more muted results in other places in the world where we’ve launched the program. The program has 3 fundamental levers. First, as you highlighted, being in the market and being competitive with new customer offers and making sure that new customer segment pricing again reflects market and competitive reality. The second is to optimize our marketing funnel efficacy, getting the mix right, getting dollars downloaded in the funnel and making sure that we are creating the highest return for each marketing dollar. Finally, we are optimizing the new customer experience and targeting people’s ability to get through our onboarding and KYC process with as few as steps as possible, which is increasing conversion rates for new customers to Western Union.

Those 3 elements and different mixes we use around the world depending on where we are from a market position, and we are seeing strong results everywhere we’re launching it, although the U.S. is so far the strongest result that we’ve seen. Matt can talk a little bit more about the lapping effect on when we expect, as you can see, we believe that revenue growth will reach transaction growth as we work our way through these cohorts of adding new customers. And so the long-term investment potential for this is high.

Matthew Cagwin: Yes. Thank you, Devin. And Darrin, thanks for the question. As you think about — really, I think it’s on a cohort basis. We launched and we talked about previously, middle of Q3, we launched the U.S. You’ve highlighted now for 2 quarters in a row, the great results we’re starting to see from there. And obviously highlighted the overall new customer growth in digital space for the whole world. As you think about it from a cohort standpoint, we would expect this to start producing positive revenue growth in that couple of quarter standpoint within a year as you think about it. It does vary by region. Our teams are working very feverishly on looking at other ways to maximize it, but we’re looking to also max by the number of customers. So I view it as positive within the year.

Darrin Peller: Great to hear. Just a very quick follow-up. I mean, it’s probably — I’m probably the only one is going to ask about this, but other and the C2B segment looked like it performed better. Just — I know some of that is the moving parts. Can you just quickly update on what the strength there was an that sustainable?

Devin McGranahan: Darrin, just a reminder, I didn’t quite note before, but that area is largely made up of our biller business in the U.S. and Argentina as well as our money order business here in the U.S. Last quarter, it was muted results because of 2 things. One is we had some currency headwinds that we’re experiencing down in Argentina as well as we rebalanced our — we have a large investment portfolio that rolls up into that business, part of our money wear business that we rebalanced last quarter to take advantage of the current market conditions. Those are — the currency has reverted back and is a tailwind now for us a bit. And then we also have a pretty large pickup from the rebalancing of our investment portfolio. We would expect it to be a strong underlying business as well as a pretty good result on the investment side for the foreseeable future in the rest of this year.

Operator: Our next question comes to us from David Togut from Evercore. Please ask your question.