The Western Union Company

Operator: Good day, and welcome to the Western Union First 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. Tom Hadley: Thank you. On today's call, we will discuss the company's first quarter and full year 2026 outlook, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our CEO, Devin McGranahan, and our CFO, Matt Cagwin. Today's call is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2025 Form 10-K for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled 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. Devin McGranahan: Good morning, and welcome to Western Union's First Quarter 2026 Financial Results Conference Call. Today, I will spend a few minutes discussing our results in the quarter and the emerging stabilization we are seeing in the U.S. remittance market. Next, I will review our M&A strategy and our recent transactions. Then finally, I will give you a quick update on where we are with our digital asset initiatives and the near-term pending launches. . In the first quarter, we reported revenue of $1 billion. On an adjusted basis, this was a decline of 1% year-over-year. This is a 400 basis point improvement over the fourth quarter and relative stabilization year-over-year. Consumer money transfer transactions were slightly positive in the quarter for the first time since Q1 of 2025, which was a 300 basis point improvement from Q4. Cross-border principal growth was again up mid-single digits, speaking to the resilience of our customer base and their perseverance in the current difficult macro environment. This quarter, we again saw incremental improvement in our CMT transaction rates quarter-over-quarter. Q1 was better than Q4, Q4 was better than Q3, and Q3 was better than the lows that came in the second quarter of 2025. We believe this should set us up to return to a more meaningful transaction growth beginning in the second quarter of this year. Adjusted earnings per share came in at $0.25 in the quarter compared to $0.41 this quarter a year ago. This is below our expectations and is the result of a combination of some quarter-specific issues as well as a seasonal change for how quarter 1 will perform going forward given the growth of our Travel Money business. The quarter-specific issues included incremental investments associated with our strategic agent signings, product expansion and the timing of certain expenses that we believe will reverse in future quarters, which Matt will cover in more detail later in the call. In response to the slow start to the year, we have decided to accelerate our operational efficiency program that we first announced at Investor Day last fall. This program is designed to improve vendor efficiency, realize the synergies we expect to achieve from the pending Intermex acquisition, and leverages AI to rationalize our existing business processes and significantly reduce labor content. As a result, we believe we can accomplish our $150 million operating efficiency program by year-end 2028 with large contributions coming in both 2026 and 2027. Our retail business in the Americas continued to face headwinds in the quarter associated with the current geopolitical environment, though we believe we are now seeing improvement from the steep declines that we saw in the middle of 2025. We did see strong performance in the quarter in many corridors like Italy to Morocco, France to Cameroon and Kuwait to Bangladesh, offset by continued weakness in the Americas across several specific and large corridors, most notably U.S. to Mexico. Though from a transaction growth rate perspective, while still negative, the U.S. to Mexico corridor improved by 350 basis points relative to the fourth quarter. Our branded digital business increased transaction growth to 21% and adjusted revenue by 6% in the quarter, with gains driven by some of the new relationships we have signed in the Middle East last year. This is an 800 basis point acceleration in our transaction growth rate, and while the revenue growth gap has increased significantly, we are encouraged by the momentum that we are seeing on the transaction side. The revenue growth is being muted by a strong growth in lower RPT corridors continued significant increase in payout to account and some of our new customer promotional offers, which we discussed on the Q4 call. We also believe this will improve in coming quarters. In Consumer Services, adjusted revenue was up 33% in the quarter, driven by growth in Travel Money led by Eurochange as well as growth in our bill pay business. We expect Consumer Services to have another strong year in 2026, as our Travel Money business is expected to approach $150 million in revenue, up from nearly nothing a few years ago. Matt will discuss our first quarter results and 2026 outlook in more detail. later in the call. Now switching briefly to the macro and focusing on the Americas as that is where much of our focus has been over the last several quarters. As you know, remittances in the Americas have faced meaningful pressure that began early last year and continued through this winter, particularly across our key U.S. to Latin American quarters. We saw meaningful declines to markets like Mexico, Ecuador and Guatemala driven by a combination of migration dynamics and U.S. immigration policy. What we're seeing now, however, is a business that is beginning to show stabilization and even potentially signs of improvement. Trends have improved across these corridors with the most recent month March, showing revenue growth rates 800 basis points or better in each of these corridors relative to the lows that we saw last summer. Starting with U.S. to Mexico, which remains the largest remittance corridor globally, Central Bank data shows that 2025 was a down year with monthly remittance principal declining double digits at multiple points throughout last year. As we move through recent months, however, we have seen those declines moderate with inbound principal activity hovering around flat to low single-digit either positive or negative, which is a vast improvement from the relative double-digit lows we experienced last summer. When we look beyond Mexico, the story also continues to be constructive. Corridors like U.S. to Ecuador and U.S. to Guatemala are meaningfully better today than they were performing last summer and into the fall. However, I do want to be clear. This is not a sharp rebound and not all corridors have improved with U.S. to Colombia, as an example, still showing weakness. But overall, we are seeing improving trends and remain optimistic about the rest of the year. We believe that what's driving stabilization is a combination of factors. First, migrant behavior has begun to normalize. After a period of disruption tied to immigration policy and labor market uncertainty, we are seeing more consistent sending patterns. Second, remittances remain a resilient category. And many of these economies, remittances represent a significant share of GDP and are nondiscretionary for senders. And third, we are benefiting from the actions that we have been taking, expanding our retail footprint, strengthening our presence in key communities and continuing to scale our digital capabilities. So stepping back, the message is, North America is not yet back to growth, but it is stabilizing. It is meaningfully better than it was last summer and the improvement we're seeing across some of our most important corridors gives us confidence that the business is now on firmer footing as we move forward. Shifting gears, I would like to spend a few minutes talking about our M&A strategy. Over the past few years, we have spent significant time advancing our strategic position as the global leader in providing accessible financial services for the aspiring populations of the world. A central pillar of this evolution has been a disciplined but opportunistic acquisition strategy focused on strengthening our footprint in high-value corridors, accelerating our digital capabilities and broadening our financial services offering. We have deliberately shifted from a strategy of complete capital return to a model that balances capital return to shareholders with value creating and targeted capability-driven acquisitions, where each transaction is designed to either expand our geographic strength, our platform functionality or our product offering to enable us to maximize the value of our global franchise to our shareholders. Last month, we closed on the acquisition of Lana in Mexico. This transaction will help strengthen our position in 1 of the most important remittance markets in the world. The acquisition gives us the license to launch a digital wallet in the country, which we plan to do later this year on our Beyond digital platform, strengthening our wall-to-wallet capabilities. It will also enable us to build on the success we have seen with our receive strategy in Argentina and Brazil, where we have a meaningful portion of our inbound remittances ending up in our own digital wallets in those countries. This allows us not only to save on commission expense, but potentially opens up new revenue streams for the company. We believe bringing a wallet to Mexico has the potential to change the way we do business in the country by enabling our 2-sided network. We look forward to updating you on our progress as we prepare for our wallet launch later this year. Earlier this month, we also completed the acquisition of Dash, Singtel's digital wallet business in Singapore, further extending our presence in Southeast Asia. This acquisition enhances our capabilities in key remittance and payment hubs, strengthening our access to digital-first customers in that region and supports our broader ambition to build a more connected Asia Pacific network. Dash brings complementary technology and distribution capabilities that will accelerate our digital onboarding and improve cross-payment efficiency across the regional corridors. We are excited to welcome Dash employees and customers to the Western Union family. In the current quarter, we expect to close the acquisition of Intermex subject, obviously, to normal regulatory approvals. We are now down to just 1 jurisdiction and are optimistic that we can attain the final approval in the coming weeks. This transaction is expected to strengthen our agent network density, improve corridor economics and further reinforce our leadership in the U.S. As previously disclosed, we expect this combination to deliver meaningful cost synergies, and I am now more optimistic today than I was just a couple of months ago when we spoke on our Q4 earnings call. The opportunity to put these businesses together and truly take a best-of-breed approach, I believe, will substantially drive value for our shareholders beginning in the back half of this year and will continue for many years to come. Over the last 6 months, the 2 teams have been hard at work designing what the post-acquisition business will look like. The more time we spend together, the more obvious it is that the culture Intermex has built will be a true asset to Western Union. The Intermex team has a laser focus on delivering for their customers and agent partners alike, which very closely aligns with the culture that we have now been building at Western Union. The 2 teams have also been thinking through synergies, and outside of the obvious public company costs, we think there are plenty of opportunities that could prove our $30 million synergy target conservative. We had originally committed to achieving synergies over the first 2 years based on the work to date, I am optimistic that it will be front-loaded as well. And lastly, as most of you know, we completed the acquisition of Eurochange in the United Kingdom, which has added meaningfully to our scale and our Travel Money platform. This transaction expands our presence in the European Travel Money market and strengthens our ability to serve outbound travelers in the United Kingdom. Eurochange enhances our physical footprint in a strategically important market and complements our broader Travel Money ecosystem by improving distribution density and product diversification. These acquisitions reflect a clear and consistent strategy. We are selectively investing in assets that enhance our corridor leadership, digital capabilities and product offerings, while reinforcing the long-term resilience and growth profile of our global network. Importantly, these transactions are not stand-alone initiatives, they're enhancing an omnichannel platform where physical and digital channels reinforce 1 another and where the acquisition serves as a catalyst for accelerating the company's strategy. I recently returned from Asia, where I met with our new team from Dash and spent several days with our team launching our new digital wallets in Australia and the Philippines. Our goal is to have an interconnected network of send and receive digital wallets across the important corridors in Asia. I also visited Vietnam for the first time and met with a few of our new partners that will accelerate the development of our payout to account network and home delivery options in that country. We see significant opportunity in increasing our market share to this important and growing market. As we outlined at our Investor Day, our strategy is focused on growing share in higher-growth markets where, for various historical reasons, we do not have our fair share of the market. Vietnam fits this perfectly where it is a $15 billion inbound remittance market, where we have only mid-single-digit market share. Additionally, some of the largest corridors are from other Asian countries, including Japan, South Korea, Australia and Singapore, where we have a strong presence. I've also met with our team in Manila as we move forward, growing our operations center there. As part of our Beyond strategy, we are regionalizing our operations in each major region to drive efficiency and speed to market. Manila will be the primary operating center for the APAC region and thus will become part of our global operating model. Before I turn the call over to Matt, I'd like to make a brief update on our digital asset initiatives. And more importantly, where we are in the transition from launch readiness to real-world adoption and scale. Over the last few months. We've crossed an important threshold. It is no longer a question of if Western Union will be active in digital assets. It is now how fast can we scale. At the foundation of our strategy is USDPT, our U.S. dollar-backed Stablecoin. USDPT is now in its final stages of readiness and is expected to go live next month. This milestone represents the completion of a significant build across issuance, treasury operations, settlement and controls and positions us to operate a native digital dollar embedded within Western Union's global network. As we approach launch, adoption is beginning to form around the coin. We are working with a growing set of exchange partners to support access, conversion and distribution across key regions, while also engaging with banks and financial institution partners in priority corridors to enable the direct settlement and treasury use cases. Together, these relationships position USDPT as a foundational asset for scaling digital payments and settlement across our platform. Building on that foundation is our Digital Asset Network, or DAN, which operationalizes USDPT and other digital assets. Across Western Union's physical and digital footprint, we are pleased to report that we plan to launch our first partner on the DAN network next week with additional partners coming online shortly thereafter. Through DAN, millions of wallet users will be able to move from digital assets into local currency using Western Union's retail network with an experience that is simple for customers and familiar for our agents. Since announcing our initial partners, we've seen strong inbound interest, and our focus now shifts to launching and scaling, onboarding new partners, expanding corridor coverage and driving volume as the network grows. Importantly, DAN is not a point solution. Our partner pipeline represents tens of millions of crypto wallets globally, creating a powerful distribution channel that brings digital asset users directly into Western Union's retail and digital network, solving an industry-wide issue of ramping from crypto to cash as a safe and effective utility. Finally, extending USDPT and DAN directly to consumers, we are preparing to launch our U.S. dollar Stable Card later this year. This product allows customers to hold value in Stablecoin form and spend globally where ever card acceptance exists, bringing digital dollars into everyday commerce. The Stable Card is particularly compelling in inflation-sensitive markets where customers want dollar-denominated value with immediate practical utility. We expect to begin rolling this out across dozens of markets with an initial wave targeted for later this year. Over time, this card will be consumer-facing expression, connecting USDPT, digital asset, retail customers, global spending into a single, integrated, easy consumer experience. Taking together, USDPT, DAN and Stable Card operate as a connected ecosystem. With launches imminent, partners coming online, and early transactions beginning to flow through the network, we are firmly now in execution mode. The focus ahead is scaling, expanding adoption, increasing velocity and embedding digital assets more deeply into Western Union's core money movement platform. This is an exciting time for the company, and I look forward to updating you on our successes in the coming quarters. In conclusion, we entered the remainder of the year focused on disciplined execution and long-term value creation. We are continuing to modernize our platform, accelerate our efficiency programs, expand our digital capabilities, and optimize our global network to better meet the evolving needs of our customers. While we remain mindful of the macroeconomic uncertainty and competitive dynamics, our priorities are clear, drive sustainable revenue growth improve operating efficiency and deliver strong cash flow. We believe the actions we are taking position us well for the future, and as always, are committed to maintaining our financial discipline, while returning value to shareholders. I want to thank our nearly 10,000 strong colleagues around the world, who are working diligently every day to accelerate our Beyond strategy. I will now turn the call over to our CFO, Matt Cagwin, to discuss our financial results in more detail. Over to you, Matt. Matthew Cagwin: Thank you, Devin, and good morning, everyone. I'm going to walk you through our 2026 first quarter financial results and our 2026 full year outlook. In the first quarter, GAAP revenue was $983 million, which on an adjusted basis was down 1%. The decrease was driven by a continued slowing of our Americas retail business, offset by growth in Consumer Services and Branded Digital, which came in at 33% and 6%, respectively. Our expectation is Q1 will be the lowest growth rate of the year due to the benefits of the Intermex acquisition, our new agent wins, accelerated branded digital revenue growth, and the launch of our digital asset strategy that Devin just spoke about. Adjusted operating margin was 13%. As we singled last quarter, we believe that Q1 2026 would be lower margin quarter due to several factors. Those factors include a lack of vendor incentive payments, which we expect to receive in future quarters this year, and higher costs associated with our new agent signings, a foreign currency loss and the seasonal dynamics associated with our Travel Money business, which has lower fixed cost coverage in the first quarter of the year. As stated, many of these margin pressures are not expected to repeat in future quarters, and a few are expected to reverse. In addition, we expect to see a meaningful benefit from our cost efficiency program in the back half of this year, driven by the Intermex synergies and lower vendor and labor costs, which will benefit from process optimization as well as the utilization of artificial intelligence. Adjusted EPS was $0.25 in the current quarter. Adjusted EPS in the current period was affected by the lower operating profits that I just discussed, as well as higher tax rate, partially offset by fewer shares outstanding. Our adjusted effective tax rate in the quarter was 15% compared to 10% in the prior year. The increase in our adjusted tax rate was primarily due to discrete benefits in the prior year period. Now turning to Consumer Services, which contributed 14% of total revenue in the quarter. First quarter adjusted revenue was up 33%, driven by the expansion of our Travel Money business and growth in our Consumer Bill Pay business. As a reminder, we're lapping the acquisition of Eurochange on April 1, but remain excited about the organic growth, which was up double digit in the first quarter. Looking ahead, we are actively working to further expand our consumer services capabilities, in line with our Beyond strategy. The Intermex acquisition strengthens our retail reach in the Americas and introduces 6 million new customers to our broader product ecosystem. In addition to that, the launch of USDPT Stablecoin, Stable Card and our Digital Asset Network also opens up multiple new revenue streams, which we believe will help accelerate future growth. As you know, Travel Money has grown from a small business just a few years ago to what we expect to be a $150 million business this year. We are applying the same approach of leveraging our brand, our global footprint and our execution capabilities to the next-generation consumer products and look forward to seeing similar results. We believe the combination of organic expansion, inorganic activity and digital innovation gives us a durable path to double-digit growth in this segment for years to come. Now transitioning to our consumer money transfer or CMT business. CMT transactions were slightly positive in the quarter relative to a year ago. This was driven by a robust branded digital business that grew transactions 21%, offset by the continued slowdown in our retail businesses led by the Americas. CMT adjusted revenue was down 6%, which continue to reflect the challenging industry backdrop that we have been navigating over the past several quarters. U.S. immigration policy uncertainty remains a meaningful headwind. Although the comparisons get a lot easier in the second quarter, as we saw the U.S. retail business down double digit in the second quarter of last year. We remain optimistic that the worst is behind us with North America and lack of CMT adjusted revenue growth, improving 300 and 500 basis points versus the fourth quarter of last year. In the first quarter, our branded digital business grew adjusted revenue by 6%, with 21% increase in transactions. This marks the tenth consecutive quarter of solid revenue growth. The Middle East continues to be 1 of our largest growth regions, driven by our new partner wins that we discussed last year. As we have flied in the past, these are primarily account-to-account transactions with lower RPT than our license business. So the gap between transactions and revenue growth will remain elevated as we continue to ramp these partners. Account payout transactions continued their strong momentum, growing over 45% in the quarter, which is our strongest quarterly growth that we've seen in the past 4 years. As Devin highlighted, we recently closed on the acquisition in Mexico and Singapore, both our wallet businesses, and we're excited about the opportunity ahead, as they will become more digital in those regions with those acquisitions. Now turning to our retail business. Overall, the performance of our retail business was up slightly on a transaction basis and more meaningfully better on a revenue basis. We continue to see softness in the Americas, but is improving, as I mentioned earlier, and Q2 gets a lot easier from a comparison perspective. We believe there are numerous compelling opportunities for our retail business to recapture share, and the acquisition of Intermex strengthens our ability to do so. By adding about 10,000 new U.S. agent locations with deep roots in the key Latin America corridors, Intermex expands our retail footprint precisely where we need it most, which strengthens our ability to serve our customers in the United States. In addition to Intermex, we continue the rollout of our new agent wins that we announced last quarter. We have now launched 3 of the 4 agents with the German post going live last Friday and the Canadian post expected to go live later this quarter. As a reminder, we expect these new agent relationships to add roughly $100 million in revenue once they are fully rolled out, which is expected to occur over the next few quarters. We are excited about the opportunities in front of us. for retail and look forward to executing against the opportunities as we work to strengthen our retail business. Now turning to our cash flow and balance sheet. We generated $109 million in operating cash flow in the first quarter. This was down 26% versus last year, driven by the lower operating profit that we discussed earlier. As expected, the first quarter CapEx was $47 million, up year-over-year, driven by higher agent signing bonuses. As discussed previously, we remain committed to strategically investing in key areas of our business while also aligning our agent compensation to performance. We continue to maintain a strong balance sheet and cash flow, with cash flow equivalents of $900 million and debt of $2.6 billion. Our leverage ratios were 2.8x and 1.8x on a gross and net basis, which we believe provides us ample flexibility for capital returns or potential M&A, while maintaining our investment-grade credit rating. As a reminder, we will fund the Intermex acquisition with a delayed draw bank facility that we entered into in January. As a result, we expect our debt-to-EBITDA ratios to be elevated above historical levels for the 12 to 18 months post closing. In the quarter, we returned over $120 million to our owners via dividends and stock repurchases. Now moving to our 2026 outlook, which assumes no macroeconomic changes and no significant impact from the conflict of the Middle East. Based on everything we know today, we are reaffirming our guidance, which includes our adjusted revenue outlook for 2026 at 6% to 9% revenue growth, inclusive of the Intermex acquisition, which we continue to expect to close in the second quarter this year. And our adjusted EPS for the full year, we believe, will be between $1.75 to $1.85. We expect Q2 EPS to be similar to last year and then to accelerate as we move into the back half of the year, driven by higher revenue associated with improving remittance backdrop, new agent wins, and a seasonally stronger period for Travel Money, combined with accelerating pace of our operating efficiency program, the benefits of some of which affected [indiscernible] our Q1 headwinds that we expect to reverse or not repeat in future quarters. Beyond the near-term efficiency program, we do see meaningful long-term opportunities from 2 additional initiatives. First, the implementation of AI has the potential to significantly improve efficiency for our business. And second, our Stablecoin infrastructure, which we believe has the potential to reduce settlement costs by replacing the legacy correspondent banking rails with a more efficient on chain alternative. Thank you for joining the call, and operator will take your questions now. Operator: [Operator Instructions] Our first question comes to us from Will Nance at Goldman Sachs. William Nance: I want to just come back to some of the moving pieces in margins, because seems like that was the primary driver of the lower EPS this quarter. And if I'm hearing you right, it sounds like you've got incentive timing in there, you've got some vendor payments. There's all seasonality of 1Q around the Travel business. And so I guess just relative to expectations, I'm just wondering if you can help delineate like what was it that actually drove things that were below expectations versus some of these things, which are more timing in nature. And I was wondering, on the FX remeasurement, if you could size that, because I imagine that was probably 1 of those items. Devin McGranahan: Will, thanks for joining the call this morning. Let me just dimensionalize a little bit for you. So we've about 50% of the decline year-over-year is driven by things that we anticipate when we had our call 2 months ago. Those are things like the vendor incentives, which we talked about happening, last year happened in Q1, but we anticipate happening over Q2, 3 and 4 this year, just phasing it when we're actually using it. Matthew Cagwin: Fixed cost coverage, we knew that would be an impact on Q1. We bought Eurochange effective April 1 last year. It comes in with a lot of employees, some buildings, things of that nature, and their revenue and profit are higher -- revenue is higher and profit occurs in Q2 and a little bit in Q3 and 4. So we knew that was going to happen. And then costs associated with the strategic partners, we anticipated that, that would be ramping spending a fair bit of tech time and signing bonus amortization and other costs associated with that. So that was all anticipated and talked about when on the call last time. The 2 items that were not anticipating when we met 8 weeks ago, was the FX loss. It's multiple pennies of EPS. It's just timing. We've had that over the last 10 years, we've had 2 or 3 times where it's been large, but we have a little bit of gains and loss every quarter, but that was a bigger item, a little bit of a surprise here in March. And then the other item that we have is our dual track got dislocated. So we have been managing very carefully for the last 4 years the ability to manage 2 things. One is how do we continue to maintain and grow our business while reducing costs on our legacy back book while investing in the future. As you probably remember from our first Investor Day, we talked about a cost redeployment program, and we did a great job of matching up the cost in our dual track. We got a little dislocated this quarter on the pace of investments on our digital asset strategy, investing in some of our other digital assets and replacing platforms relative to how much cost we would pull out elsewhere in the business. As Devin talked a minute ago, we've doubled down on that in the last couple of weeks, and we see a path to accelerate that, both with the Intermix business, the strength of AI, process improvement, which is why we felt comfortable keeping our guidance where we were. William Nance: Got it. Okay. I appreciate all the color. That's helpful. And if I can just maybe throw in another 1 around the conflict in the Middle East. And I was just wondering if you could provide a little bit of color around what you're seeing specifically with money transfers into and out of that region. And how that could evolve over the coming months. I acknowledge that it's very uncertain. Appreciate taking the questions. Devin McGranahan: Will, we to date have seen a mixed response in the Middle East, and this is typical of kind of our business, right -- and the diversification of our business, right? So we have seen a noted decline, as you would expect, of travel from Europe to the Middle East, which had some impact on our Travel Money business, particularly in the U.K. in the first quarter, which exacerbated the fixed cost coverage issues that Matt talked about. So less people are vacationing in Dubai, and that has an impact on our Travel Money business. However, the opposite is true, which is in the early times of a conflict like this, many people move money out of the region. And so we've actually seen a moderate acceleration of outbound remittances from the Middle East. Now historically, we have seen similar patterns that then revert themselves if the conflict remains extended for some period of time, where there's less migration into the region, there's less opportunities for people economically, and thus, the overall volume of outbound remittances begins to shrink. So I think we're in the early stages of this conflict. We see mixed results in our business based on the differences of the businesses, and are keeping a close eye on how this develops over time. I think like all, we wish for a quick resolution, so that we can return back to normal course and speed, particularly in our business in the Middle East, which as you can see, is becoming a strong driver of our financial performance, particularly in digital. I want to come back just briefly on Matt's comment about the dual track in the quarter. We're very excited about the things that we're investing in, whether that be digital assets, whether it be the rollout of the digital wallets in multiple new countries around the world, the signing of new partners. The team has done an exceptionally good job over the last, call it, 24 to 36 months of managing the cost equation while we invest for the future. This is a strength of the team and our ability to get back on track I remain very confident of and the team's ability to accelerate reducing the costs in parallel with investing for the future is where we're going to be for the rest of the year. Operator: Our next question comes to us from Tien-Tsin Huang at JPMorgan. Tien-Tsin Huang: Just building on that Devin and your confidence there and the dual track pacing issue not repeating itself. I'm just curious, just, for example, the accelerating of the efficiency program. Is there execution risk there. It doesn't sound like the AI savings is a part of that, but I'm just asking that because you're also launching some of these wallets and you've got the digital asset launch. You're also absorbing 2, I guess, 3 acquisitions, including Intermix. So just thinking about the challenge of doing all of those things, but also delivering on the second half EPS acceleration that you reaffirmed there. Devin McGranahan: Thanks, Tien-Tsin. Of course, there is always execution risk. And part of what I was highlighting in my last commentary is the team has a pretty good track record over the last couple of years as we implemented the prior $150 million program and invested in Beyond digital platform and then building out the Travel Money business. And so this is a known muscle and skill for the team. So I feel confident that we can continue to flex it. We got out a little out of the line with the timing in the quarter. But think about the program basically is 3 things, right? One, there's the operating model efficiency, and in my public comments, I talked about how we're regionalizing that operating model that reduces corporate overhead that reduces some of the centralization. We're well down the path of that. and we'll continue to strengthen our regional operating model in the Americas, in Europe and then in Asia Pacific across our 3 big regional operating centers. The second is, as we're going on this journey, and we've got line of sight on these things already. We are sunsetting legacy platforms as we move to the Beyond platform as we move to the next-generation point-of-sale as we make the data infrastructure all cloud-based and in Snowflake. That allows us just to shut stuff down which we've got clear line of sight and road map on. And then the third is AI is starting to take effect. We're starting to see broader applications of it across our service operations across our tech development and in some cases, even into our marketing functions. And so we think that will accelerate. And we're building -- the most important thing is building momentum around those skills within people of the company. And so as adopt the skills and the tools that are being developed, we see that in the productivity gains. And then frankly, we just need to hire less people, all of the backfills and all the things that happen every day need to stop happening then as the tools replace the work. So I feel good about it, and I know the team can execute. Tien-Tsin Huang: Okay. No, that's clear. Just my quick follow-up, then I'd love to hear a little bit more on the 2 acquisitions, Lana and Dash. I know some of it you've been looking at those for quite a bit, but you have a great view on what's going on in the ground in a lot of these regions. Is the vision here that each of these will ultimately be portable into other countries around, say, Mexico and core Singapore. Is that the vision there that you're making bets on these regions with these individual assets and then you're going to expand from there? I'm just thinking about how -- is this the beachhead for each? Or could we expect more similar wallet acquisitions down the road? Devin McGranahan: Yes, so think about it, and we talked about this at the Investor Day, we've now kind of solidified what we call the Beyond platform. And so the Beyond platform, the most important part of it is a services layer that connects into our infrastructure for core payment processing for core risk and compliance for moving across our funds out network. And into that services layer, we can plug different experiences in different countries around the world so that we can then create a seamless network of these wallets. So that enables us to accelerate this through acquisitions by buying properties that already exist, plugging them into the beyond framework, which then takes advantage of our payout networks. And that's a great example. In Singapore with Dash, the team is now already hard at work, moving from Singtel Dash's payout network, which was, as you would imagine, significantly subscale to ours and the economics were significantly different, because they dependent on a lot of intermediary players to move the money around the world. We're basically going to turn that off and plug it right into Western Union's APN network, which will have both consumer advantages, but more importantly, format and the team economic advantages on reducing payout costs. And so the Beyond framework and platform that we've talked about enables us to more rapidly expand our digital wallets, both organically, like we're doing in Australia and the Philippines, but also inorganically, like we're now doing in Mexico and Singapore. The key to this, and Matt can talk more about it, is finding those assets that we can acquire at reasonable valuations and thus then enabling us to expand faster than we can just organically. When those opportunities present themselves, we will take advantage of them. Matthew Cagwin: And Tien-Tsin, if I could build a little bit on what Devin just said, when we looked at these wallets, for us, I wish there was a global license and you could just basically buy 1 license and do the stuff everywhere in the world. So we don't have licenses everywhere in the world would like to be today for our wallet strategy. by buying in Mexico and in Singapore that brought licenses. So that's kind of step number 1 we didn't have the license to do this. Two, as we always look at the tech stack as it brings them into us, is Devin just talked about, we feel pretty good about where we are now with our beyond platform. Back when we started talking to Dash, we were not in the same place. We were still doing a little bit of creativity in Europe in a couple of places in Latin America, and we made some evolutions in learnings and gotten stronger over the last 4 years. . So we were looking at them for the technology at that time to bring in ideas and thoughts about how to make ours better, faster and pace. We've now caught where that is. I don't think that's as paramount as it would have been before. But Devin could expand on this maybe in the after call. But he was just in Singapore with the team. The other thing we always look for is people. And when you can buy a company that brings in really strong talent, it's local knowledge base that they can help you accelerate, and we're super excited about Dash for doing that because we brought good concentration of operations folks, tech folks, market present folks and then now we can overlay the fact that we got great payment rails around the world. We've got brand recognition around the world that we can then take that in ports and fuel and then start creating a wallet payout between Singapore, our wallet in Australia, which we are taking live right now, our wallet in a couple of other places which we've not talked about. So we're building on an infrastructure within Asia where you can start doing well-to-well transactions, which has helped us do. So I'm very excited about both of them. It might have been 1 of the longest regulatory review process in my life, but we're excited to have them part of the family. Tien-Tsin Huang: Yes, a couple of years, but through that. That's great. . Operator: Our next question is from Vasu Govil at KBW. Vasundhara Govil: I guess I'll ask my first one on the Stablecoin launch. Could you maybe talk through the go-to-market strategy there? Are you targeting users in specific corridors when you first launch it? And sort of what milestones should we be tracking over the next 12 months? Devin McGranahan: Thank you. Think about it in 3 different tranches. The first, which is the launch of USDPT, we are not originally launching that as consumer facing. So we are launching it as an alternative to the interbank Swift settlement network that we use today that Matt and the treasury team use to settle with our agents, and so we are launching in a couple of countries with some important aging partners here in the next quarter to begin moving and settling between us and our agents on chain in real time at much faster speeds and again, over weekends and holidays where we have capital tied up because the traditional banking system only settles Monday through Friday and takes T+2, T+3 in some parts of the world. And so that is launch number one, and that is going to be within Western Union, modernizing our settlement platform and our money movement in between us and our major partners around the world. Launch #2, which will happen next week, is the digital asset network. So we're enabling digital wallet companies, digital asset wallet companies around the world to be able to have Western Union as a funds off ramp or payout option for their wallet customers. So it opens us up to a population of millions and millions, $10 million plus, native digital customers who own digital assets in wallets around the world, and they can now pay out those digital assets and fee out currency across the Western Union retail network. We have a pipeline of partners that have signed and more in the pipeline to time, and then we work through each and implementing them so that they have that option for their customers. As I said, the first 1 of those will go live next week. The third, which is more consumer facing is our Stable Card. And that product, we're launching in a couple of countries here and I'll call it the next 90 to 180 days that will allow us to then offer as a payout option to Western Union customers a Stablecoin backed card as an alternative to pay out to account or cash payout. So you will, as a consumer in 1 of these countries, be able to select a Western Union Visa Stable Card to receive your remittance payout. And so you can look forward to seeing the milestones of consumers having that as an option in a number of countries before the end of the year. Vasundhara Govil: That's super helpful. And just a quick follow-up, Matt, on the margins. If you could just help us with how we should think through the cadence of margins for the rest of the year so we can calibrate our models accordingly. That would be super helpful. Matthew Cagwin: Yes. So think about -- we now provided in our outlook, tax range, interest is pretty fixed. So I think you can back into the margins off the comment I intentionally gave on -- think about Q2 EPS being in the ballpark of last year, and then accelerating from there. I think you can back into margin off that because we pretty much help you below the line. . Operator: Our next question comes to us from Bryan Keane at Citi. Bryan Keane: I just wanted to ask about the digital -- adjusted digital revenue. It kind of stayed at 6% despite the surge in transaction growth to the Middle East. So if you just separate out the Middle East surge kind of what happened to the relationship on adjusted revenue to digital transactions. Devin McGranahan: Okay. So as we talked about, Bryan, back on the Q4 call, we had seen some market trends towards more aggressive new customer offers, particularly coming out of the lows of last summer. We probably followed those to the detriment of revenue to maintain new customer acquisition. And so what you are seeing is the impacts of that program along with the shift to path to account and the shift on these lower RPT corridors. So it's both mix, which are growing strongly. As Matt said, payout to account grew 45% in the quarter, which is a material acceleration for us yet again. So payout to account is growing faster, which is an impact. Payout to low RPT corridors like India is impacting. We're doing better in those kinds of quarters than we historically have. . And this new customer acquisition strategy that we are moving back from a bit, which was very aggressive new customer offers, that impacted revenue is in that mix as well. Bryan Keane: Okay. That's really helpful. And then, Devin, obviously, AI continues to evolve, and productivity gains are continuing to show some [indiscernible] results. I guess, can you quantify what you think AI could do to some of the back office costs for Western Union? Devin McGranahan: So we believe it can have significant impact. A lot of our processes, a lot of our historical support infrastructure will benefit from modernization. The most important thing is the pace at which we've been able to do that, and we've now been on this for 3 years. We've moved a lot of the data to the cloud. We started sunsetting systems. We started automating. It has always been throttled by how much tech development you can do, how much you can ramp down legacy systems, ramp up new systems. And so for a company like us, the ability to accelerate the move from the old, many times, heavily labor-intensive systems and platforms that support operations, customer service, risk and compliance, treasury functions, accounting functions, is, in fact, the elixir that allows a large legacy company to start moving a lot quicker on this modernization journey. And so that's really what the team is focused on, which is how do we accelerate the path we already know we needed to go down of getting off of these legacy processing and support and infrastructure platforms at a much faster pace, which then takes away a lot of the labor that's required to support, maintain and operate them. And so we're making good progress on that. And that is part of why I think we believe we can accelerate our most recently announced operational and efficiency improvement by at least a couple of years because we're starting to see the green shoots on it. Operator: Our final question is from Darrin Peller at Wolfe Research. Darrin Peller: I just want to go back to the comments you made about expanding the retail footprint for a minute. I know you've had in the past, touched on kind of paring down locations and being more efficient. Maybe help us understand the strategy here again, just to revisit where we're going to go geographically that you think there's real opportunity. You touched on under your prepared remarks, but I guess I'm curious if that's going to dovetail with your push on more wallets more digital, more international on the digital side as well just because it feels like it's a lot to do in 1 period where you're going more digital, more white label partner it stable going kind of revisiting some of the tenants based on the execution. Devin McGranahan: Yes. Thanks, Bryan (sic) [ Darrin ]. I think you can think about the footprint as a twofold strategy, both of which are reasonably well controlled, one, which we've talked about ad nauseam in the last 2 or 3 calls is we have ramped up and have succeeded in signing several significant retail partners Kroger going exclusive, the Deutsche Post, the Canada Post, these will expand our retail footprint. But most importantly, their competitive takeaway, and so they allow us to expand our customer base in retail through the addition of partners that on any given 1 of them will have several thousand locations up to as many as 10,000 locations. So that strategy of signing material partners and being the company that is the partner of choice for large retail networks is well underway. And as Matt talked about, we see significant revenue gains in the coming months from the implementation of those partners. The second, which we've talked about, which is more controlled distribution, which supports the digital strategy. So those are our owned locations and our concept stores, where, again, it's a small part of the distribution. Today, it's a couple of thousand. But that really allows us to control the experience. We can introduce people to the digital products, the digital wallets, we can cross-sell, Travel Money, Bill Pay, Prepaid. And so our owned retail network in New York City has the strongest performance on our Prepaid as the remittance tax came in, because it's our own employees who are helping the customer understand the value of the Prepaid product with the remittance tax. So those 2 dimensions are really the strategy. Darrin Peller: Okay. All right. One follow-up. Just timing-wise, I mean, again, some of these initiatives are exciting around both the digital wallet partnerships you went through earlier and the digital wall in terms of -- and the Stablecoin dynamics and strategy there, both on the Card side and the Network side. Just what are the timing expectations you'd expect to see some of the fruit of this? I know it's been an investment initiative for a number of years. . Devin McGranahan: Getting and expecting real benefits before the end of this year, and Matt can talk more about it. But Stablecoin products and services are all being launched as we speak. The wallets are ramping. We'll start to see the benefit of Singtel probably here in the second quarter. And as we launch in Mexico, Australia, Philippines, as those come online, we believe the value will start to accumulate, which should all happen before the end of the year. Matthew Cagwin: If I can just build on Devin's point real quick, kind of call wrapping up here. But if I work my way through the 3 topics on a Stablecoin, some are very much easier than others, just the infrastructure they're using, which I know at times we talk about how hard is to roll things out in our organization. But the Stable Card, the partner we're using and the rails we're using, we'll be able to get into dozens of locations relatively rapidly versus doing onesies and twosies. The DAN network, we're able to use our current rails in our normal payout network. So that will be able to be rolled out pretty broadly pretty quickly. The 1 that's a little bit more of a grind is getting the right partners and the pay and pay out for using USDPT to build to use for settlement processes. We're working on a few countries right now, hoping to that progress is the world will evolve and help us accelerate that. But that 1 is a little bit more of a -- we got to go push our way through it and get it to work. We're the first to have ability to get more broad-based than we normally do for a lot of our stuff. Operator: Thank you for joining the Western Union First Quarter 2026 Results Conference Call. We hope you have a great day.