Q1 2024 Western Union Co Earnings Call

Participants

Devin B. McGranahan; President, CEO & Director; The Western Union Company

Matthew Cagwin; Executive VP & CFO; The Western Union Company

Tom Hadley

Andrew Garth Schmidt; VP & Analyst; Citigroup Inc., Research Division

Bryan Connell Keane; Research Analyst; Deutsche Bank AG, Research Division

James Eugene Faucette; Managing Director; Morgan Stanley, Research Division

Jason Alan Kupferberg; MD in US Equity Research & Senior Analyst; BofA Securities, Research Division

Kenneth Christopher Suchoski; US Payments and FinTech Analyst; Autonomous Research US LP

Tien-Tsin Huang; Senior Analyst; JPMorgan Chase & Co, Research Division

Vasundhara Govil; MD; Keefe, Bruyette, & Woods, Inc., Research Division

William Alfred Nance; Research Analyst; Goldman Sachs Group, Inc., Research Division

Presentation

Operator

Good day, and welcome to the Western Union First Quarter 2024 Conference Call. (Operator Instructions) Please note that this event is being recorded.
I would now like to turn the call 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 2024 results, 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 2023 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 B. McGranahan

Good afternoon, and welcome to Western Union's First Quarter 2024 Financial Results Conference Call. Today, we reported another quarter of steady progress, and I am pleased with the direction of our business under our EVOLVE 2025 strategy.
Over the last 18 months, we have been working hard to return our digital business to double-digit revenue growth and to achieve stability in our retail business. This quarter's results further demonstrate that our efforts are working. We delivered positive revenue growth and improved transaction trends in both our retail and our digital businesses in the quarter.
Consumer money transfer transactions grew at 6% in the quarter, the third consecutive of 5% or more transaction growth. Excluding the COVID grow over period, this is the first time we have seen 3 consecutive 5%-plus transaction growth quarters since the second quarter of 2014, nearly a decade ago. As I have said before, we strongly believe that the consistent and sustainable transaction growth is the best indicator of the future health of our business.
In addition to maintaining our transaction momentum, this quarter, we also made significant progress in reducing the spread between transaction growth and revenue growth. As we have previously discussed, closing this gap towards our long-term goal of 200 to 300 basis points is a priority, and we made a lot of progress in the first quarter.
Our total consumer money transfer we improved the spread between transaction growth and revenue growth by approximately 300 basis points compared to the fourth quarter. And more importantly, in our branded digital business, we improved 500 basis points quarter-over-quarter with our branded digital business now growing adjusted revenue at 9%, which is the highest growth rate we have seen since the third quarter of 2021.
Our confidence in reaching sustainable, profitable revenue growth by 2025 grows each quarter as we see increased stability in our retail business, increased growth in our digital business and ongoing broadening of our consumer services offerings and better customer and agent experiences. We are also achieving these goals while maintaining our industry-leading margins, adjusted margins of 19% to 21%.
Now switching briefly to the macro. The macro backdrop remains consistent with what we have seen for the last couple of quarters. While beginning to temper, we continue to see elevated inflation and higher interest rates around much of the world. The good news is our customers have found a way to adapt and to continue to send money in similar sizes as they have done in the past. This confirms our belief in the resilience of our customer base, the power of our brand and our at-scale global operating model.
Our principal per transaction in the quarter was up 1% on a constant currency basis when excluding the positive effects from Iraq, and our customers are broadly sending with similar frequency as they did a year ago.
For the first quarter, our revenue reached $1.050 billion, reflecting a 3% increase on an adjusted basis. Adjusted earnings per share came in strong at $0.45 or up 5% on a year-over-year basis, which now puts us in a position to increase our outlook for the full year.
In the quarter, we continued to return capital to our shareholders with stock repurchases and dividends totaling $230 million. This brings our cumulative capital return to shareholders since I joined the company in late 2021 to over $1.5 billion. We have facilitated this type of capital return while navigating an uncertain economic backdrop, resetting our market competitive position, exiting Russia, and investing significantly in our products, technology and our go-to-market strategies.
As revenue growth continues to accelerate, we expect to be able to continue to generate strong free cash flows while also investing in our future. Matt will further discuss our financial results in more detail and provide an update to our 2024 outlook later in this call.
Over the last year, we have made significant progress on our most important strategic initiatives, including improving our retail operations, updating our digital platforms, elevating our customer and agent experiences and enhancing our overall value proposition in the marketplace. This focus on our strategic priorities is leading to the improved financial results we reported today. And while we have made substantial progress, we believe there are still opportunities to continue to improve our overall operating performance.
Now on to our retail business. Immigration around the world is showing no signs of slowing down. In the U.S., for example, the migrant population hit 51 million people earlier this year, which is a new record and accounts for roughly 15% of the U.S. population and approximately 20% of the U.S. workforce according to the Center for Immigration Studies.
It was also reported that since the pandemic, migrant workers in the U.S. have increased by 3 million, while at the same time, the U.S. born workforce is down roughly 1 million people. Our research would indicate that many migrants start their remittance journey in a retail setting for a variety of important reasons. Given the likely future ongoing growth and migration around the world, we believe that macro trends support the fact that we can indeed stabilize our retail business, while at the same time, growing our digital and consumer services businesses.
As you remember from our Investor Day, we view our retail business as the gateway to Western Union. Over the last couple of years, we have seen more than 20 million new remittance customers annually in our agent retail locations around the world. These are 20 million new opportunities to showcase our brand, to build trust, to highlight our improved customer experience and to start a relationship with our customers that will hopefully last decades.
While many new migrants start their remittance journey in a retail setting, over time, a meaningful portion migrate to digital channels as they establish in-market banking relationships. When we provide them with a world-class experience in retail, an attractive value proposition and a broader set of financial service offerings, we build trust and can grow with them on their financial journey in their new home.
Last year, we introduced several point-of-sale improvements, including Remember Me, Quick Resend and one step refund to improve our customer and agent experiences.
I am happy to report that in the first quarter, we processed nearly 2 million transactions using Quick Resend largely still in North America, which is up from roughly the 500,000 transactions we processed when I first shared the launch of this product in the second quarter of 2023. In recent weeks, we have begun to roll out this functionality to Europe and APAC with the goal of building on the success of the improved customer convenience that we now see in North America.
In addition to Quick Resend, we've expanded our One-step Refund functionality, which allows agents to process refunds without the need to engage with our call center associates. This functionality is now available to the vast majority of our network around the world and in the first quarter of 2024, 2/3 of all refunds processed globally were processed using our one-step refund approach. This contributed to a significant reduction in call center volumes and an improved experience for both our agents and our customers alike.
Lastly, we strive to create a more customer-centric approach through the expanded rollout of our Universal Customer ID. This technology enables one customer profile across our channels for both senders and receivers. It is allowing us to move from a transaction-centric company to a customer-centric company.
With the Universal Customer ID and our improved CRM capabilities, we can now proactively alert customers when their transactions have been delivered. We can make recommendations to receivers on where they can conveniently pick up their transaction or in some markets, even enable receivers to redirect their remittance directly into their account or to a Western Union digital wallet.
A truly customer-centric and channel-agnostic approach is central to our new loyalty program, which I am very pleased to announce we successfully launched in France this week, achieving our goal of an April launch.
Being able to recognize and reward customers across channels for both senders and receivers is something that we are excited about and believe it will help us improve both the engagement and the retention of our entire customer base.
We are continuously looking for ways to improve our customer and agent experience. We are working hard to expand the rollout of many new additional functionalities, including debit payment at the point of sale, digital receipts and enhanced pay out to account capabilities around the globe. We look forward to updating you on these important initiatives in future quarters.
In addition to these customer and agent-facing improvements, we are also nearing the end of our core transaction processing engine migration to the cloud. We expect this will be completed this summer, and we look forward to benefiting from a more consumption-based model and the increased scalability that comes with a modern cloud-based architecture. This migration will enable our development teams to innovate more quickly and reliably deliver solutions to our agents and customers globally. Having a fully cloud-enabled core processing platform will enable us to be more agile and competitive in a digital-first world.
We believe all regions will benefit from our improved technology-enabled experiences, but one I'd like to highlight today is our European region. Recall that this region has had multiple external forces working against it over the last several years, including our decision to exit our business in Russia and Belarus and the loss of meaningful revenue at 2 large European agents. In addition, Europe is a very competitive part of the world with strong competitors in both the retail and the digital channels.
Over the last 18 months, we have been focused on our European operations with the launch of our new digital go-to-market strategy, the expansion of our controlled distribution strategy, the improvement of our value proposition, including dynamic pricing, the launch of our new loyalty program, and the expansion of our product portfolio to include foreign exchange services. These efforts are beginning to pay off.
In the first quarter, our European region grew transactions at a 5% year-over-year growth rate, a marked improvement from the double-digit declines of recent years and the first quarter of 5% plus transaction growth since the fourth quarter of 2019. This improvement was accomplished while absorbing the loss of counter service at one of our largest agents in France, which discontinued their FLA support -- supported remittance offering in the fourth quarter of last year.
While this agent loss will continue to be a headwind for the coming quarters, the European team did a great job of navigating the situation by extending the contract length by almost 9 months and executing on a remediation plan, which included building up an independent agent network that now totals over 1,500 locations, launching both a digital and kiosk solution for our partner to replace their counter service and expanding the capabilities of our branded digital offering across the country.
In the past, we might have chalked up this agent departure to the "market decline of retail in the European region" and left it at that. Instead, we viewed it as an opportunity to do the very type of problem solving required to hold our market position to improve the experience for our customers, to assist and support our agent partner and to mitigate the long-term impact of this action on the underlying health of our business. And because of those decisions, we are now seeing better outcomes than our original projections.
I would now like to spend a minute discussing our Consumer Services segment. In previous calls, we have talked about how retail money order and bill payment have been the largest 2 businesses within Consumer Services and the biggest drivers of growth over the last couple of years.
We have also made it a goal to grow this segment of our business double digits annually for the foreseeable future. While we do expect retail money order and bill payments to continue to grow, we believe the majority of the future incremental growth within Consumer Services will come from products and services we have launched in the last 18 months or are planning to launch in the near future. Services like prepaid debit cards, foreign exchange and the ancillary revenue streams associated with our digital wallets.
Within the last 2 weeks, we have launched our second digital wallet-based experience in Latin America with the launch of our digital wallet in Brazil. This is in addition to the wallet we launched in Argentina under our Pago Facil brand late last year. While both are still early in their evolution, they provide us with a platform to assist our customers with their daily needs, including bill payments, savings, money transfer, both domestic and cross-border as well as access to point-of-sale payment solutions.
Brazil is a unique market for us and one we believe will make for an interesting wallet launch. It is a country where we have a large, owned distribution network, where the market is roughly 50-50 split between send and receive, and it is one of the few countries in the world where our digital business is larger than our retail business on a transaction basis.
We believe that these characteristics give us the ability to work on the retail to digital escalator, provide unique marketing opportunities, and accelerate our ramp based on our learnings from our recent Argentinian launch late last year.
In Argentina, we have successfully on-boarded close to 100,000 wallet-based customers now, and I am pleased to see that 38% of all funds in to the wallet this quarter came from redirects of inbound remittances.
In the most recent month, 35% of our active monthly users did a bill payment transaction, 28% either put cash in or took cash out at one of our retail locations and our banking partner, Santander, funded 3,000 loans to our customers during the first quarter, a quarter in which we were recognized by Santander with their personal loan award as one of their largest loan originators.
We believe this type of wallet-based relationship to our customers will make for a more engaged experience, create a 2-sided network, drive affinity to our brand and ultimately help us improve retention while also driving long-term sustainable and profitable revenue growth in our core business.
Finally, I'd like to highlight a new strategic partnership. Earlier this month, we began the launch of our strategic relationship with the Swiss Post, one of the most respected brands in Switzerland. This is a new long-term partnership for Western Union, and we are excited to bring Western Union services to over 700 new Swiss Post locations across the country.
Looking ahead, we remain optimistic about our strategic direction and the progress we are making. We are pleased with the change in the underlying trajectory of our business driven by improved transaction trends across both our digital and retail businesses, while continuing to deliver top line -- improving top line financial results and ongoing strong cash flow.
I remain confident that we have the right strategy, the right capabilities, the right team and the right mindset to achieve our EVOLVE 2025 goals.
Thank you for joining the call today. I will now turn the call over to Matt to discuss our financial results in more detail.

Matthew Cagwin

Thank you, Devin, and good afternoon, everyone. I'm excited to be here today to walk you through our 2024 first quarter results and our improved financial outlook. I would like to start off by saying how pleased we are with our revenue performance in the first quarter with adjusted revenue up 3% year-over-year to $1.050 billion.
Results benefited from ongoing progress of our EVOLVE 2025 strategy as well as revenue from Iraq. Please note that there was a positive calendar impact from leap year in the first quarter.
Consumer money transfer transactions grew 6% in the quarter, led by continued momentum in our branded digital business, growth in our digital white label business and continued stabilization of our retail transactions.
Adjusted operating margin was 19.7% compared to 20.5% last year, with the decrease primarily related to incremental marketing spend. Adjusted EPS was $0.45 versus $0.43 last year, with the current period benefiting from lower share count, partially offset by higher adjusted tax rate.
Now turning to our CMT business. Revenue grew 3% on an adjusted basis with transaction growth of 6%. Excluding our domestic money transfer businesses, revenue and transaction growth would have been 1 percentage point higher. As a reminder, our domestic money transfer business globally, it now represents 4% of total CMT revenue.
Moving to our branded digital business. Revenue in the first quarter was up 9% with transaction growth of 13%. We are pleased with the accelerated revenue growth, which is showing positive momentum. As expected, the spread between transaction and revenue growth rates declined to 400 basis points in the first quarter compared to double-digit spread in the prior year period. We expect this to continue to bounce around a little in the coming quarters, but we believe that we can exit 2024 at around 400 basis points.
Now turning to our regional view. We saw quarter-over-quarter revenue improvements in almost all regions. Leading the way were our largest 2 regions, North America and Europe. As you may remember, we launched our new branded digital go-to-market strategy in North America in the third quarter of 2022, and we continue to see momentum in this region with solid transaction growth and sequential revenue acceleration of almost 500 basis points.
We also see send amounts with North America principal per transaction up 1% year-over-year, which is further proof of our customers' ability to navigate the high inflationary environment that they have experienced in recent years.
I'm highlighting North America, but we are also seeing positive trends in other parts of the world and are excited about the progress we're making globally.
Now moving to our retail business. As Devin mentioned earlier, we have maintained stable transaction trends for the third consecutive quarter as we continue to deploy operational improvements and optimize our network. We are also seeing transaction stability or growth in 3 of our 5 regions and continue to work to enhance our agent and customer experience while improving our value proposition in the marketplace.
Europe and CIS led the improvement in retail transaction trends in the first quarter, with transactions growing mid-single digit. We are seeing strength across a number of markets, led by Spain, which was fueled by strong growth in transactions at Western Union's owned and concept stores.
Now moving to our Consumer Services segment, which represented 8% of the company's revenue in the quarter. As a reminder, consumer services mostly comprised of bill payment revenue in the United States and Argentina and retail money order in the U.S. Adjusted revenue in the first quarter was up 8%, benefiting from the strength of our retail money order business as well as new services we continue to introduce to our customers. As we ramp up these initiatives, we believe that we can grow consumer services in the double-digit range going forward.
As Devin mentioned, we expect most of our incremental growth to come from new or expanded products such as our wallet, prepaid card, lending partnerships and foreign exchange.
Now switching briefly to our cost redeployment program. We continue to make progress on our 5-year $150 million expense redeployment program that we announced during our Investor Day 18 months ago.
In the first quarter, we incurred $14 million in redeployment costs as we continue to reinvest in efficiencies and manage our cost structure. So far this year, we have taken actions, which we expect to free up over $35 million in 2024. This is in addition to the $50 million we freed up in 2023.
We are now a little over a year into our 5-year commitment and have accomplished more than 50% of our Investor Day goal. After being at Western Union for almost 2 years, I am even more confident that we have meaningful opportunity left to improve both efficiency and effectiveness.
Now turning to our cash flow and balance sheet. Year-to-date, we have generated $94 million in operating cash flows compared to $137 million in the prior period. The year-over-year change in operating cash flows was largely driven by timing of payments and the change in settlement assets associated with our float portfolio. We expect full year free cash flow to be roughly the same as our net income when you exclude the unusual tax payments that we anticipate this year.
Capital expenditures were $35 million in the first quarter and were approximately 40% lower than the first quarter of last year as we have remained vigilant on investing in the right areas and shifting our agents from large upfront signing bonuses to performance-driven commission structures.
We continue to maintain a strong balance sheet with cash and cash equivalents of $1.1 billion and debt of $2.5 billion. Our leverage ratios remained strong and were at 2.5x and 1.4x on a gross and net basis, which we believe provides us with ample flexibility for potential M&A while maintaining our investment-grade credit rating.
Now moving to our outlook. Today, based on our performance in the first quarter, and our confidence for the remainder of the year, we are raising our 2024 revenue and EPS outlook. This outlook assumes no material changes in macroeconomic conditions.
We now expect adjusted revenue to be in the range of $4.15 billion to $4.225 billion or a $37.5 million increase above the midpoint of our previous outlook.
Adjusted operating margin outlook has remained unchanged and is expected to be in the range of 19% to 21%. And lastly, adjusted EPS is now expected to be in the range of $1.70 to $1.80 or a $0.05 improvement in our previous outlook.
As a reminder, our 2024 second quarter growth rate will be lower sequentially as we have benefited from leap year in the first quarter of this year and our second quarter last year had a large benefit from Iraq.
The situation in Iraq has continued to be fluid, but we have solved some of our operational issues, which we believe will enable us to be around the upper end of our estimate for Iraq of $50 million to $100 million this year.
To recap, we are off to a great start, and we are confident in the trends that we were seeing in the first few months of the year as well as the progress we are making towards our EVOLVE 2025 strategy.
Thank you for joining our call today and operator we are ready to take questions.

Question and Answer Session

Operator

(Operator Instructions) Our first question comes to us from Tien-Tsin Huang from JPMorgan.

Tien-Tsin Huang

Good results here. I think just maybe -- just a simple question on the revenue raise and the outlook. Can you go into a little bit more detail on what the factors are and the contributions from other consumer services with the core money [transfer side]?

Matthew Cagwin

Tien-Tsin, thanks for joining the call today. We saw a really good performance in Q1 from really 3 different areas. We look at our over delivery in Q1 being split basically around 1/2 to 2/3 being tied to Iraq, relative to what we had initially thought, about 1/3 tied to our brand and digital business coming a little bit stronger than we thought and then a little bit in our consumer services business.

Tien-Tsin Huang

Got it. So spread across all those 3. And then just -- I think you mentioned you'll see some volatility in the revenue transaction growth spread in the branded digital business. Can you maybe explain what's happening there? Are you doing some -- taking some pricing actions in some places? What's driving the volatility is my question?

Matthew Cagwin

As you may remember, we launched our go-to-market strategy at different points throughout the year last year and the year before. Those things sunsets going to make it move around a little bit as well as we're constantly monitoring the market making adjustments as well as we see mix shifts between geographies. We've seen really strong performance in Q1 this year, which has a little bit higher RPT. You could -- as we continue to make advances in our parts of the world, that mix difference can make it bounce around. So multiple things can make a bounce around.

Operator

Our next question comes to us from [Timothy Chiodo] from Credit Suisse.

I wanted to see if you could expand a little bit upon some of your expanded relationship that with Visa, you recently put out the press release talking about the Visa Direct capability and the expansion of some new markets there. And while we're at it on the topic of Visa, it's been about a year or so now, there hasn't been a ton of updates. I was wondering if you could give us a status report on Visa Plus and how that rollout is going over the past year or so?

Devin B. McGranahan

Thanks for the questions. The last one is the easiest. As you remember and recall Visa Plus is a wallet-to-wallet based rail, given that we have not yet launched our wallet in the U.S., there is no activity to update on Visa Plus.
With regard to the broader Visa relationship, we are pleased with the progress we are making. We continue to find opportunities using Visa Direct to move money around the world, and we are expanding our issuing capabilities in partnership with Visa, including our new wallet in Brazil as well as the prepaid card in the U.S. that we had launched a couple of quarters ago and our digital wallet and banking experiences in Europe.

Operator

Our next question comes to us from Will Nance from Goldman Sachs.

William Alfred Nance

I just -- there are a couple of updates on some of the kind of tech initiatives that were made live in one market and live in another market. And I just thought it might be a good time to spend some time on some of the technology initiatives that you have that maybe are less visible to the customer. You've mentioned a couple of things that are -- have been pushed out to every market. I'm just wondering if you could kind of update us on sort of the tech stack initiatives and kind of simplification of your internal infrastructure and what that has done to have the ease of deployment of some of these new products and features across every geography globally. It sounds like you've been able to do that on some of the more recent product launches?

Devin B. McGranahan

Will, thanks for the question. I would lump our tech, and I'll call it, tech infrastructure into 3 components. And I think we're making progress on all 3. One is the processing capabilities, which I highlighted here, which is our core processing platform, our core settlement platform. We are nearing the end of a multiyear journey to migrate those platforms into the cloud. And I anticipate before the end of the year, we will have our processing platform there. And we have a few countries left to do on our settlement platform, but we are nearing the end of that journey as well.
So our core money movement capabilities will be fully cloud-enabled, which enables us to then obviously move quicker around the world, and enables us to leverage those services in a much easier way than when they were mainframe based here in the U.S.
The second part, which I also highlighted on the call, is the technology investments we're making to create the ability to manage our business from a customer standpoint and not from a transaction standpoint. So given the history of Western Union and the history in our retail business, many of our core processing platforms, our risk decision systems, our customer interaction modules, were all based on transactions. In fact, we used something called the MTCN to delineate a transaction. We are migrating many of those systems and many of the processes to be customer-centric. And I talked about our universal customer ID as the indicator that we will use to manage our infrastructure instead of the transaction code.
The third is the infrastructure investments that we put in place underlying our core platforms, both on the retail side and the digital side. We've been modernizing those platforms. We have our next-generation digital platform. I'll probably be directionally correct, but exactly wrong in about 12 or 13 countries.
We continue to update our point-of-sale platform with many of the things I highlighted on this call to improve ease of use, speed and obviously, customer and agent experience. We will continue to be doing that for some real period of time. We see ongoing opportunities to update those front-end platforms both to improve customer experience, but also to make them more seamless and easy to deliver around the globe.

William Alfred Nance

Got it. That's super helpful. I appreciate all the detail there. And then maybe just a follow-up question on Iraq and just maybe looking for a little bit more detail on -- I just want to -- how much of that impact -- I mean, how much that impacted the quarter in this quarter? And then it sounds like you're talking about sort of the higher end, just how do you -- the previous range that you gave, how are you kind of thinking about that over the course of the year?

Matthew Cagwin

Will, thanks for the question. So this quarter was about a 4% improvement to revenue as a result of Iraq year-over-year. And then as what I talked about in the prepared remarks is we do expect to be around the upper end of our previous guide of $50 million to $100 million for the full year.

Operator

Our next question comes to us from Andrew Schmidt from Citi.

Andrew Garth Schmidt

It's good to see the progress here. I want to start with digital. Second quarter, we've seen kind of this low teens transaction growth rate, which is good to see. Maybe talk about just the sustainability of that as you start to lap tougher comps, obviously, second quarter does have a little bit of 1 day less in terms of just the lack of leap year benefit. But anything else to call out there from a trend line perspective would be helpful?

Devin B. McGranahan

Thanks for the question. When we launched EVOLVE 2025, we had done a lot of work both around the macro market, but also what we thought was Western Union's potential within that market. And we remained firmly of the belief that being able to grow our digital business double digits in transactions ended revenue is an achievable goal as part of our EVOLVE 2025 strategy. We've now had 3 quarters in a row of double digit, 4 quarters in a row of double-digit transaction growth which I think begins to speak to the sustainability given we launched this program back in August, September of 2022. We continue to see opportunities, both in different parts of the world as well as in our own experience to ensure that we can continue to deliver and meet our EVOLVE 2025 goals. So I remain very confident.

Andrew Garth Schmidt

Perfect. Very clear. And then maybe I'll switch gears to the retail side. It sounds like transactions ex-Iraq continue to improve. Perhaps you could put a finer point on that. And then I think that one of the bigger questions we get is when you start to lap these promotions in the second quarter here, can that spread also start to narrow? Or will more promotions be necessary to kind of drive growth there? Maybe you can talk about what you're seeing in the market from a promotional competitive intensity perspective there as well. Both those fronts will be helpful?

Matthew Cagwin

Andrew, thanks for the question. Similar to Devin's answer on digital, we've now had 3 quarters of flattish growth for our retail business. Iraq is not very mature to the overall transaction count, so it doesn't make a major difference between the 2.
We feel good about it. We feel like our goal when we talked back in October '22 was to get back to stability having 3 quarters in a row. It's the first time we've had 3 quarters in a row in 5, 7 years, it's been a long time. And we still feel like there's a lot more opportunity we have to work with our partners, the technology Devin talked about during the prepared remarks.
The only one that's really largely rolled out is a one-step refund. We still have tons of room on our new debit solutions. We're rolling out the Quick Resend, Remember Me. So we feel like there's a lot more runway ahead of us on this. It may bounce around from quarter-to-quarter as we're rolling those things out, but we think there's a lot of opportunity.

Operator

Our next question comes to us from Vasu Govil from KBW.

Vasundhara Govil

I guess the first one I had was on agent renewal activity. Devin, as you guys have sort of done all this work and improved the new -- the functionality that's available on the platform, to what degree has that changed the conversation you're having with agents? And is it resulting in better economic terms or longer-term contracts as you go into these negotiations?

Devin B. McGranahan

That's a great question. Great question, Vasu. Thanks for joining the call today. Part of how we have been able to transition from the large upfront signing bonus is that we historically have been offering to a much more performance-oriented structure is the confidence that the agents have now in the transaction trends that they're seeing in their own agent offices.
So as they see us improve performance, they realize they, in fact, can make more money than potentially under the more fixed type structures that existed before. So our improved transaction performance is translating into our ability to change the terms and nature of the conversation with some of our largest and most important agents.
We continue to believe we are a partner-driven business. Our agents are exceptionally important to us.
The other thing that I think has changed for them is our recommitment to the retail business in general. Our willingness to invest in our point of sale, our willingness. We rolled out our loyalty program with the explicit recognition of agents participating in it and rewarding them for that, but also making it truly this time, a retail and digital loyalty program, not largely just a digital loyalty program.
So agents see those kinds of actions and behaviors, and we've gotten very good response from the majority around the world.

Vasundhara Govil

And a quick one for you, Matt. I was -- I wanted to ask about the margin cadence for the year. I know that moves around a ton and you guys are keeping some flexibility for investments, but if you could help us think through any meaningful differences that we should be modeling quarter-to-quarter?

Matthew Cagwin

Yes. So Vasu, it's similar to past 2 years, it will bounce around as we have investment opportunities. It's hard to give you any given quarter, but we are committed to the 19% to 21% margin for the full year. This quarter came in solid at 19.6%. It's hard to give you any one particular item on that.

Operator

Our next question comes to us from Ken Suchoski from Autonomous.

Kenneth Christopher Suchoski

Can you just unpack the drivers behind that spread narrowing in the digital branded business? I'm curious what you guys are seeing when you look at the data, whether it's by geography or cohort or any other factors that you evaluate?

Devin B. McGranahan

Ken, thanks for joining the call. I think we have been messaging for a couple of quarters now that the spread would close, and it would close based on how we rolled out the program. And so as we continue to lap the rollout of the program, and we talked about historically how we did that by region, U.S. first, then Europe, then kind of rest of the world, finishing with Australia sometime in the mid- to late summer of 2023. Then as we lapped those rollouts, you would see the spread start to close. That accelerated a bit more than we probably anticipated in the first quarter, and that's driven by improving transaction trends and a bit of retention for those cohorts of customers that have come under this program, which has accelerated the closure of that revenue, which I think are positive.

Kenneth Christopher Suchoski

Okay. Great. And then I guess just a question on the physical retail spread. When we try to do some macro math assuming, call it, $40 million, $45 million of Iraq revenue contribution, a similar kind of principal per transaction for that business. It looks like the physical retail revenue per transaction ex-Iraq jumped up quite a bit quarter-over-quarter. And so I'm just wondering if that's what you're seeing and also what's driving that quarter-over-quarter increase?

Matthew Cagwin

Yes. So Ken, thanks for joining the call. We're not having a major change in our retail RPTs. I think you're using probably too low of an RPT for Iraq. We've talked previously on calls that our yield and RPT for Iraq is higher than the average business. The principal amounts are larger, they're more C2B type transactions. So you have to anticipate more than the average for the company, call it, almost more double our RPT for Iraq, and you'll get to -- hopefully, that will get you to a number. It's not a major change for our retail business.

Devin B. McGranahan

I think the other thing, Ken, you might be seeing is there are some mix shifts in the business, which we highlighted, particularly on the retail side. The strength in Europe has been good with nearly mid-single-digit transaction growth. In general, RPTs are higher in Europe than they are in some other parts of the world. And so you're seeing some mix shift in some of those calculations probably as well. But we're really pleased that, that gap has closed by 300 basis points as well.

Operator

Our next question comes to us from Jason Kupferberg from Bank of America.

Jason Alan Kupferberg

Just a follow-up on Iraq, just to make sure I got the math right. I think you said it contributed 4 points of growth in the quarter. So I guess that's about $40 million, and I think you said you're tracking to, call it, the $100 million level for the year. So how should we think about kind of a base case for the quarterly cadence from here? And then just how much of the full year revenue guidance raise is coming from Iraq? Would it be kind of 1/2 to 2/3, I think that was your answer to Tien-Tsin's question in terms of the source of upside in the quarter, but I just wanted to check that for the year?

Matthew Cagwin

Jason, thanks for joining the call today. To your first question, your math is a little bit different on the estimating what Q1 was. It's 4% -- contributing 4% growth. There was an amount last year as well as we disclosed, it was around $25 million last year. So the numbers some were a little bit more than the low end of our range we've given for the full year. .
I also in my prepared remarks, said that some of our -- we solved some of the operational issues for Iraq, which is why we're flagging it will be around the upper end of the range now because there are some things we've not solved. To best way to think about what Iraq could be going forward, I'm going to give you a very wide range because it's still a fluid market, but think about somewhere in that $10 million to $30 million range per quarter for the rest of the year.

Jason Alan Kupferberg

Okay. That's helpful. And then ...

Devin B. McGranahan

And just coming back to the raise, though. I think the raise is driven by the confidence in the underlying trends in revenue. As Matt said, Iraq remains volatile. There's still issues to be resolved, but we see strength in our underlying core business, which gives us confidence in that raise without having to rely on some outsized performance from Iraq.

Jason Alan Kupferberg

Understood. And then just in terms of the digital revenue growth trend, obviously, nice improvement there to 9% in the quarter. How do you see that trending during the balance of the year? I know the year-over-year comps start to flip around and get tougher. But do you think we exit the year double-digit plus? Or I wanted to get a sense of that?

Matthew Cagwin

Yes. So we still are believing that we can get to be a double-digit grower Q1, as I mentioned in the prepared remarks, we had an extra day for leap year. So I think that we will continue to bounce around the high single-digit to low double-digit range is our optimism. But a lot more work to do.

Operator

Our next question comes to us from Bryan Keane from Deutsche Bank.

Bryan Connell Keane

Just hoping you could flesh out the new loyalty program and its potential improve or -- seeing improvement in the retail business and how that could have a factor going forward to sustainable growth in retail?

Devin B. McGranahan

Thank you for the question. We're excited about the new loyalty program. As you know from our EVOLVE 2025 strategy outlined, improving retention across our business is one of the key drivers of long-term sustainable growth, particularly in retail. And so we are focused on recognizing our customers at every point of interaction and then for our best customers, rewarding them for their loyalty over time.
Our prior loyalty program was not terribly effective in the retail environment. It was exceptionally hard both for agents to administer and for customers to redeem. It required a code and a special sequence of actions in order to do that.
We've actually changed the program. It's now customer based regardless of channel. It will allow a customer to earn a reward after 5 transactions and to seamlessly redeem that reward on any transaction, whether that is online or at a retail location. And we're providing incentives over time to our agents to participate and help us grow that program and obviously, loyalty with our retail customers.

Bryan Connell Keane

Got it. And just a follow-up question I had, thinking about the spread, but I want to think about the spread ex-Iraq. So maybe you could just give us the numbers ex-Iraq on the spread. And did that close at all from last quarter? It seemed like it was pretty similar gap there between revenue and transactions?

Matthew Cagwin

The digital business closing spread that Devin talked about has no Iraq in it. Iraq's all with -- is in the nondigital business. So yes, it closed without it.

Operator

Our next question comes to us from Ramsey El-Assal from Barclays.

Matthew Cagwin

Ramsey, are you there?

Operator

We'll go to the next question from James Faucette from Morgan Stanley.

James Eugene Faucette

I wanted to ask just a couple of quick follow-up questions. First, and I'll just put them both out there simultaneously. First, on Iraq, message is clear for this year. How and when will we have visibility into how much of kind of that quarterly cadence could carry into next year? And what are the key factors in determining that? And then obviously, your expected growth for multiple years in consumer services is quite compelling, but I'm wondering how we should think about the evolution of profitability? And how closely that may track consumer services and the profitability of those services?

Matthew Cagwin

James, thanks for joining the call today. I'll tackle the first question on that on the Iraq side. We think -- it's a fluid market. So it's hard for me to tell you what's going to happen in Q1 of 2025, but we have now made some meaningful progress to stabilize some of the operational issues. It's come down to a more repeatable amount over the last couple of months. So we feel optimistic this thing could last a while. That's why we've rolled it into our guide and didn't overly emphasize in our prepared remarks today. So we do view it as hopefully a sustainable part of our business in that range of $10 million to $30 million a quarter.

Devin B. McGranahan

On the second question with regard to consumer services as you saw in the prepared remarks and on the slides, there's a wide range of products and services that we are working to deliver with varying margin profiles. We remain committed to grow consumer services at margins that are consistent with the overall company, if not better. So we do not expect consumer services to be large and dilutive over time, and we are hoping, particularly for some of the higher-value products and services like debit interchange and the prepaid cards as well as some of our investments that are coming to fruition around foreign exchange could yield better margins than our core transactional business in some cases.

Operator

There are no additional questions in the queue at this time. Thank you for joining the Western Union First Quarter 2024 Conference Call. We hope you have a great day.