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Edited Transcript of WU earnings conference call or presentation 31-Oct-19 8:30pm GMT

Q3 2019 Western Union Co Earnings Call

ENGLEWOOD Nov 21, 2019 (Thomson StreetEvents) -- Edited Transcript of Western Union Co earnings conference call or presentation Thursday, October 31, 2019 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brad Windbigler

The Western Union Company - Senior VP, Treasurer and Head of Payments Finance & IR

* Hikmet Ersek

The Western Union Company - President, CEO & Director

* Rajesh K. Agrawal

The Western Union Company - Executive VP & CFO

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Conference Call Participants

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* Andrew William Jeffrey

SunTrust Robinson Humphrey, Inc., Research Division - Director

* Ashwin Vassant Shirvaikar

Citigroup Inc, Research Division - Director and U.S. Computer and Business Services Analyst

* Bryan Connell Keane

Deutsche Bank AG, Research Division - Research Analyst

* Darrin David Peller

Wolfe Research, LLC - MD & Senior Analyst

* David Michael Scharf

JMP Securities LLC, Research Division - MD and Senior Research Analyst

* James Eric Friedman

Susquehanna Financial Group, LLLP, Research Division - Senior Analyst

* Jason Alan Kupferberg

BofA Merrill Lynch, Research Division - MD in US Equity Research & Senior Analyst

* Kartik Mehta

Northcoast Research Partners, LLC - Executive MD, Director of Research, Principal & Equity Research Analyst

* Priscilla Kenmelly Russo

Morgan Stanley, Research Division - Research Associate

* Ramsey Clark El-Assal

Barclays Bank PLC, Research Division - Research Analyst

* Tien-Tsin Huang

JP Morgan Chase & Co, Research Division - Senior Analyst

* Timothy Wayne Willi

Wells Fargo Securities, LLC, Research Division - MD & Senior Analyst

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Presentation

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Operator [1]

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Good day and welcome to the Western Union Third Quarter 2019 Results Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Brad Windbigler, Head of Investor Relations. Please go ahead.

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Brad Windbigler, The Western Union Company - Senior VP, Treasurer and Head of Payments Finance & IR [2]

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Thank you, Andrew.

On today's call, we will discuss the company's third quarter results and our financial 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 the supplemental tables with our press release.

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 2018 Form 10-K, for additional information concerning the factors that could cause actual results to differ materially from forward-looking statements.

During the call, we will discuss some items that do not conform to generally accepted accounting principles. We've reconciled those items to the most comparable GAAP measures on our website, westernunion.com, under the Investor Relations section. We will also discuss certain adjusted metrics. Although the expenses that have been excluded from adjusted metrics are specific to these initiatives, the types of expenses may be similar to types of expenses that the company has previously incurred and can reasonably be expected to incur in the future.

All statements made by Western Union officers on this call are the property of The Western Union Company and subject to copyright protection. Other than the replay noted in our press release, Western Union has not authorized and disclaims responsibility for any recording, replay or redistribution of the -- of any transcription of this call.

I would now like to turn the call over to Hikmet Ersek.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [3]

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Thank you, Brad, and good afternoon, everyone.

Third quarter results were solid as we produced strong adjusted margins and improved consumer money transfer revenue growth and completed significant actions related to our previously announced restructuring program. Digital growth remained strong, with digital money transfer, including westernunion.com and third party, like global digital services, increasing more than 20% in the quarter.

Additionally, we're seeing Business Solutions delivered its fifth consecutive quarter of constant currency revenue growth. And we are -- we were able to, again, use our strong cash flow to return significant funds to our shareholders through share repurchase and dividends. We've now returned well over $700 million year-to-date.

Given our third quarter results and trends expected for the remainder of the year, we remain on track with our full year financial outlook. Raj will give you more details on the quarter and our restructuring activities in a few minutes. Before that, I would like to review the long-term strategy and financial targets we announced last month, including a 23% operating margin in 2022 and the low double-digit earnings per share compound annual growth rate for the next 3 years compared to our 2019 adjusted outlook.

As noted at our Investors' Day, we have tremendous assets for cross-border money movement and payments. Let me recap this briefly. We have a vast global network, a strong brand, a distinct global processing and settlement capabilities. Over time, our business and customers have proven to be resilient, and they trust us to move their funds quickly and reliably. In recent years, we have strengthened our compliance capabilities, added more digital services and expanded our network connections to bank accounts, mobile wallets and cards. We continue to progress our digital expansion and are announced -- and announced the opening of westernunion.com in India, where consumers will now be able to send funds cross-border through our service. Although India is a traditional inbound country, we believe there is an incremental opportunity for outbound business. India is one of the fastest-growing emerging economies, and outbound remittances have been growing the last several years.

We have also implemented real-time cross-border transfer and payment capabilities via different channels. In addition, we have taken operational steps to make our platform more agile by investing in new technology, implementing lean processes and adjusting our operating model.

With this foundation in place, our new global sales [group] will focus on opening our platform to more third-party use cases in both cross-border money transfer and payment solutions. We believe this will give us incremental long-term revenue opportunities. This includes areas such as e-commerce marketplaces, where we have already begun a collaboration with Amazon; as well as white-label consumer money transfer for third parties, cross-border services for institutions and many other opportunities.

We mentioned some of the white-label money transfer examples at our Investor Day, and Sberbank in Russia and Saudi Telecom are continuing to perform very well and add growth to our portfolio. We are now expanding this opportunity to other countries. We recently announced new white label and processing agreements with major financial institutions in Korea and Japan.

Our 3-year targets assume 2% to 3% revenue growth overall, but over the long term, we expect new cross-border solution services for third parties will contribute incremental growth to our business.

In our (inaudible) consumer money transfer business, we expect revenue growth will be driven by 3 primary initiatives. First, we want to create deeper relationships with customers, whether they ultimately transact in digital or retail. Second, we plan to leverage data to better customize the user experience and maximize lifetime value. This includes using technology and artificial intelligence to expand our dynamic pricing activities at an even more micro level and provide customized offers to consumers. And third, we plan to increase the productivity of our network by providing specialized customer and agent experiences at top agent locations based on sent revenue. This will include initiatives such as digital self-service, priority lanes, real-time marketing offers, expanded product offerings and differentiated agent incentives.

In Business Solutions, we expect revenue growth to be led by adding more business verticals. We are continuing to expand existing high-growth areas such as education payments, while also leveraging our EDGE platform and digital self-service offerings.

As we discussed last quarter, we have also begun a restructuring plan and are undertaking our other efficiency initiatives to accelerate profit growth and cash flow for the next 3 years while the new platform revenue initiatives develop. We anticipate these actions to generate $150 million of incremental profitability by 2022, in addition to providing additional funds for reinvestment in the growth of the business. These savings, combined with our revenue assumptions, support our financial targets of improving operating margins by -- to approximately 23% in 2022 and delivering a low double-digit EPS compound annual growth rate over the next 3 years.

We also expect to generate more than $3 billion of operating cash flow over the 2020 to 2022 period and return $2.5 billion to $3 billion to shareholders through dividends and share repurchases.

So we are excited about the future. Our cross-border money transfer business is solid, and digital business is growing strong. Business Solutions has delivered better growth, and we are expanding our presence in the very large B2B market. In addition, we believe that we have incremental long-term growth opportunities by opening our platform to third parties. Overall, third quarter results were solid and the efficiency initiatives are well underway.

Now I would like to turn it over to Raj for a more detailed discussion toward the third quarter financial results. Raj?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [4]

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Thank you, Hikmet.

Third quarter revenue of $1.3 billion declined 6% compared to the prior year period, while adjusted constant currency revenue, which excludes our divested businesses in the prior year period, increased 4%. Currency translation, net of the impact from hedges, reduced third quarter revenue by approximately $46 million compared to the prior year, primarily due to depreciation of the Argentine peso. The decline in the peso negatively impacted reported revenue by 2%, while the effect of inflation on our Argentina businesses is estimated to have positively impacted both reported and constant currency revenue by approximately 2%.

In the consumer-to-consumer segment, revenue increased 1%, or 2% on a constant currency basis, while transactions grew 2%. Total C2C cross-border principal increased 3%, or 4% on a constant currency basis, while principal per transaction was flat or increased 2% constant currency. The spread between C2C transaction and revenue growth in the quarter was 1%, with a negative 1% impact from currency. Pricing and mix offset each other as pricing positively impacted revenue, while mix had a negative impact.

Turning to the regional results, North America revenue grew 2% on a reported and constant currency basis, while transactions declined 1%. Growth was led by the U.S.-to-Mexico corridor and other U.S. outbound business, which was partially offset by continued declines in U.S. domestic money transfer. Domestic declines were generally similar to last quarter's trends.

In Europe -- in the Europe and CIS region, revenue declined 1%, or increased 1% on a constant currency basis, with growth led by Spain, France and Russia. Transactions in the region increased 6%, aided by the Sberbank white-label business.

Revenue in the Middle East, Africa and South Asia region grew 4% on a reported basis or 5% constant currency, while transactions increased 1%. Revenue growth was driven by strength in Saudi Arabia and in the UAE, including benefits from the Saudi Telecom white-label business and increased prices in certain corridors. These benefits were partially offset by lost business due to hard currency limitations in certain African markets.

The Latin American and Caribbean region continued to deliver strong constant currency revenue growth, led by transaction growth in Ecuador and Chile. Revenue in the region increased 4% on a reported basis or 12% constant currency, while transactions grew 10%.

In the APAC region, revenue declined 13% on both a recorded and constant currency basis. Transactions were down 6% in the region. Transaction trends improved sequentially, while revenue trends were just similar to last quarter, partially due to pricing reductions implemented in certain markets.

westernunion.com revenue grew 16% or 17% constant currency, with transaction growth of 16%. wu.com represented 14% of total C2C revenue in the quarter. Cross-border westernunion.com revenue increased approximately 25%, but this was partially offset by declines in domestic money transfer.

Business Solutions revenue was flat on a reported basis or increased 3% constant currency and represented 8% of company revenues in the quarter. Constant currency revenue growth was driven by strong performance generated from customers in Europe as well as increased sales in hedging products and strong growth in the education and financial institution verticals.

Other revenues, which consist primarily of our retail bill payments businesses in the U.S. and Argentina, decreased 48% in the quarter, which reflects the impact of the Speedpay and Paymap divestitures in May. The Pago Facil walk-in business in Argentina posted good increases in transactions and local currency revenue growth and increased in U.S. dollar terms as well. Other revenues represented 7% of total company revenues in the quarter.

Turning to margins and profitability, we will focus on consolidated margins as segment margins are not comparable with the prior year period due to reallocation of corporate costs following the divestiture of the Speedpay business. We are also providing adjusted metrics to exclude restructuring expenses, merger and acquisition costs and related tax effects.

The consolidated GAAP operating margin was 15.1% in the quarter compared to 21.8% in the prior year period. The decline was primarily due to the impact of restructuring expenses from our previously announced initiatives. We incurred $92 million of restructuring expense in the quarter, with the significant majority attributable to severance. We continue to expect approximately $100 million of restructuring expense for the full year and approximately $50 million to be incurred in 2020.

Adjusted operating margin in the third quarter was 22.3% compared to 22% in the prior year period, with the increase primarily due to operating efficiencies, partially offset by the impact of the Speedpay and Paymap divestitures. Speedpay and Paymap contributed about 50 basis points to last year's third quarter margin, while foreign exchange hedges provided a benefit of $10 million in the current quarter compared to a benefit of $4 million in the prior year period. We expect adjusted margins to be lower in the fourth quarter due to timing of spending and planned investments, and we are maintaining our approximately 20% adjusted margin outlook for the full year.

The GAAP effective tax rate was 16.8% in the quarter compared to 21.7% in the prior year period, while the adjusted tax rate of 18% compared to 11.8% in the prior year period. The decrease in the GAAP rate was primarily due to changes in estimates for the -- for Tax Act provisional accounting in the prior year period. The increase in the adjusted rate was primarily due to nonrecurring benefits in the prior year.

GAAP earnings per share in the quarter was $0.32 compared to $0.46 in the prior year period, with the decrease primarily due to restructuring expenses. Adjusted earnings per share in the third quarter was $0.49 compared to $0.53 in the prior year period due to dilution from the Speedpay divestiture and a higher adjusted tax rate, partially offset by lower shares outstanding.

Turning to our cash flow and balance sheet, year-to-date cash flow from operating activities was $665 million. Capital expenditures in the quarter were approximately $19 million. At the end of the quarter, we had cash of $1.4 billion and debt of $3.2 billion. We returned $224 million to shareholders in the third quarter, including $84 million in dividends and $140 million of share repurchases, which represented approximately 6.5 million shares. The outstanding share count at quarter end was 420 million shares, and we had $1.1 billion remaining under our existing and new share repurchase authorizations, the majority of which expires in December 2021.

Turning to our financial outlook, we are affirming our 3-year financial targets and 2019 full year financial outlook. We continue to expect GAAP revenues for the full year to decrease mid-single digits due to the divestiture of the Speedpay business in May. On an adjusted constant currency basis, excluding Speedpay and Paymap for both years and excluding any benefit from Argentine inflation, we expect a low single-digit constant currency revenue increase. GAAP operating margin is expected to be approximately 18%, while the adjusted operating margin is expected to be approximately 20%. We expect GAAP sector tax rate to be in the range of approximately 18% to 19% and the adjusted rate approximately 19% for the full year. We continue to expect the effective tax rate in 2020 to be in the mid-teens range.

GAAP EPS for the year is expected to be in the range of $2.47 to $2.57, while adjusted earnings per share is expected to be in a -- or in the range of $1.70 to $1.80. GAAP cash flow from operating activities for 2019 is expected to be approximately $800 million, while adjusted operating cash flow is expected to be about $950 million. We continue to expect to spend between $500 million and $600 million on share repurchases for the full year, and we have repurchased $475 million through the third quarter.

In summary, we are pleased with the quarter's results, and we remain on track with our full year financial outlook. We have begun implementing our new global strategy designed to drive profitability, efficiency and long-term growth, and we have made significant progress on the restructuring. We have also continued to return significant funds to shareholders while maintaining a strong balance sheet. We look forward to delivering our strategy and financial targets, and we will provide updates on key activities as we move forward.

Thank you for joining our call today. And operator, we are now ready to take questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question comes from Darrin Peller of Wolfe Research.

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Darrin David Peller, Wolfe Research, LLC - MD & Senior Analyst [2]

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Starting off on the revenue side, I mean pricing looked like it benefited you by, I think you said 100 basis points. So I think we saw some of those trends in the World Bank data, too. I mean is that a broad-based macro trend you're seeing from a competitive standpoint across the industry? Or are you actually already starting to see some of the customized efforts you talked about at your Investor Day taking hold, where dynamic pricing is already being implemented?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [3]

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Well, yes, I'd say, Darrin, the pricing benefit, we didn't quantify. We said that pricing and mix have largely offset each other. But we have seen in the market, generally, that the pricing is relatively stable. So we haven't really seen any pricing pressures certainly on the downside, and it has been quite stable. As we do more dynamic pricing and as we bring more technology into the equation, looking at location-based pricing or day of week and time of day, it actually is more difficult to actually distinguish between what is a pricing increase or decrease. And so we really want to get away from giving that because it may not be actually accurate, right? So we really are trying to drive the overall lifetime value of a customer as we modify our pricing strategy.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [4]

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But generally, I would say, Darrin, the pricing environment is stable. And we feel we are quite competitive with our corridors. And as you know, Darrin, being -- as Raj said, being in so many corridors and being so dynamic helps us to adjust the prices and really focus on the customer long-term value.

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Darrin David Peller, Wolfe Research, LLC - MD & Senior Analyst [5]

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Okay. All right. That helps. And just one quick follow-up, guys. I mean the -- you obviously call out a lot around the partnership model now on the ability to use your network for others, STC and Sberbank as the notable ones. You mentioned others coming on. I mean I guess I'm just trying to figure out the materiality of these to your transaction growth rates and how you'd expect them to impact transaction growth rates on the overall C2C business starting as early as 2020. I mean is this enough to move the needle? And what kind of numbers of larger partners are you adding beyond the ones you talked about already?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [6]

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So the good thing is that -- let me start with the good news. It's incremental, right? Because we saw in the Sberbank -- for instance, the Sberbank transaction or bank transactions are happening anyway. But it's quite complex with the correspondent banking, and they are choosing us to do an easy way to transfer that. That's really an incremental transactions and not cannibalizing in big picture our business, our existing Western Union-branded business, right?

I think from the -- it's still, as you know, 4 or 5 examples worldwide. I just came back from a world tour, and I just -- we just signed an agreement in Japan. We just signed an agreement in South Korea, which we are very excited. They are similar like Sberbank, big banks. They want to use the platform to drop money worldwide, and that kind of strategy is a long-term strategy. As you also know, making agreements, financial institutions are long-term agreements. At the same time, it takes some time to implement them because you have to -- your IT steer systems has to be matched with their systems. But given our open API, we are very confident that we can really adjust it very fast.

So I'm excited about that, putting our platform and -- to the banks. Because in that case, we are not offering a new product, we are really solving a problem of the banks and -- which they have, and the money moves there account-to-account anyway. But with our real-time accounts payout, it's really replacing their issue in most cases.

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Operator [7]

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The question comes from Jason Kupferberg of Bank of America Merrill Lynch.

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Jason Alan Kupferberg, BofA Merrill Lynch, Research Division - MD in US Equity Research & Senior Analyst [8]

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I just wanted to see if you guys have any -- I just want to see if you guys had any preliminary thoughts on where 2020 revenue growth might land. I'm just thinking about it, obviously, in the context of the 3-year guide. Some of these initiatives that you've been embarking on will presumably ramp to some extent next year, others may take longer. So I just wanted to see where we should be thinking about a reasonable range potentially for next year, obviously, assuming no major changes in the macro backdrop.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [9]

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Yes, Jason, I would say that we're still comfortable with the 3-year view that we gave. Our assumption is that we're going to grow 2% to 3%, and that's assumed -- just as a reminder, that assumed about 20% digital growth, which includes wu.com and some of these digital partners but nothing that material. And we assumed a relatively stable retail business in that regard, with the dynamic pricing and the engagement we'll have with the customer. And then we also assumed a mid-single-digit B2B growth over that 3-year period. So we're not really ready to give specific guidance for next year, but we're comfortable with the 3-year view that we gave.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [10]

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And also the new opportunities, Jason, are long-term opportunities. And once they get material -- we are very excited with the start, but once we -- they get material, we will give definitely some more color on that. So it's early, but as Raj said, that we feel comfortable with our 3-years' assumptions on revenue.

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Jason Alan Kupferberg, BofA Merrill Lynch, Research Division - MD in US Equity Research & Senior Analyst [11]

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Okay. And you talked about the uptick in C2C constant currency revenue growth. I think we went from 1% last quarter to 2% this quarter. Does it feel like 2% is sustainable?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [12]

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Well, that -- the 2% to 3% outlook for the 3 years assumes that their -- the consumer business in total is going to grow 2% to 3% as well, all right? The uptick in the quarter, just specifically, was related in large part to the significantly improved performance in the Middle East, right, with the -- and Saudi Telecom was a key part of that overall performance. So yes, we'd love to have it continue in that range. So let's see how things transpire here, but it was good performance.

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Jason Alan Kupferberg, BofA Merrill Lynch, Research Division - MD in US Equity Research & Senior Analyst [13]

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Just one more for me. I was curious, just as you continue to roll out wu.com in more countries, if you're seeing any distinct patterns in terms of how the usage patterns of the service tend to evolve when you actually launch in a new country.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [14]

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Yes, I think so. I mean the India example, which I gave earlier, it's a new example for us launching a dot-com business in a receiving -- mainly receiving country. But don't forget, India has 1.2 billion people, and that's very fast growing [economy], maybe millions of emerging middle class. And they are trading and they are connected globally, and they do want to send money. I think we have some opportunities there. We have to create the brand awareness there, obviously, to send money also, not only to receive money. And -- but we are very excited about that.

And also, just one thing on India. We recently announced the -- real time on an account in India, we made an agreement with UPI. It's -- UPI is a kind of a -- kind of ID, which...

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [15]

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YES BANK.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [16]

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With -- and with YES BANK, together. So we can drop immediate -- we can really drop immediately money just with the phone numbers and with the name, especially if UPI name to the accounts or to all Indian banks, which we are the first there and we are the first financial institutions doing that for cross-border transactions to India. And we are very excited about that also.

So to your question on westernunion.com, it depends on the market. It takes time. But it has still a huge potential. And I'm very proud to say that remember, Jason, a few years ago, you asked me how -- when are we going to have the 10% of the revenue -- of the total revenue. Meanwhile, we have 14% of our total revenue is done by westernunion.com, which -- and it's still growing to 20%.

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Operator [17]

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The next question comes from Tien-Tsin Huang of JPMorgan.

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Tien-Tsin Huang, JP Morgan Chase & Co, Research Division - Senior Analyst [18]

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The margin, I wanted to ask the -- you're running a little bit ahead year-to-date, what, 20.6%, it looks like, ahead of your approximate 20%. I think, Raj, you mentioned it will be a little bit lower in the fourth quarter. What -- is that normal way of seasonality spending? Are you doing something unique? I'm just trying to get a good jumping-off point here and whatever you can tell us on '21 -- 2020 margin would be great, too.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [19]

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It sounds like a slippage of time there, Tien-Tsin. Yes, the -- as I look at this year as being more -- this quarter as being timing-related. It's similar to last year's pattern. It doesn't necessarily mean that that's going to happen every year, but there was some timing of spending. And we do have some further investments in the fourth quarter. We could end up a little bit above or so or a little bit below, it just depends on how we spend the money in the fourth quarter. But we're still comfortable with the approximately 20% outlook for this year.

And as we had said at Investor Day, we do expect to get margin improvement each of the next 3 years. And so I won't get any more specific than that, but we are looking for margin improvement next year.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [20]

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But generally, as we started our program, Tien-Tsin, I will say that, really, the lean management tools helped the company how we think about our operative way, how we really look at our optimized business. But at the same time, the growth shows also that we have potential to further grow. So we are not holding back, not investing. And in Q4, I believe that we're going to continue to invest for the growth initiatives, and that's -- but still improving the margin. So I'm very confident about that.

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Tien-Tsin Huang, JP Morgan Chase & Co, Research Division - Senior Analyst [21]

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Okay. Great. Real quick, if you don't mind, Hikmet, at Money20/20, Washington, the people there, it was very clear, talking about open platform and strategy, it seemed very clear everyone's on board. I'm curious, the pipeline for new potential partners here now that you've been more vocal and visible with it, how has that evolved here in the -- in recent weeks or recent days?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [22]

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Well, as a sales guy, I was on the road now the last 10 days around the world. I have to say that I met several CEOs. And I have to say that we are really solving a problem for some big financial institutions, especially for direct Saudi currencies, for opening our platform. And I'm very excited, and there are some potential prospects here. And I believe that there's some more to come, and I'm excited about that.

Actually, in Japan and South Korea, we really signed ones, right? They're our new partners there. They want to use our platform to drop money globally in a very efficient and compliant way and the fastest way, right, and real time to billions of accounts. And that makes me very excited.

And also, Amazon is one of the examples that we are opening our platform to collect funds for a third party. It's their product, but it's our network, it's our machine, it's our engine. And I believe that these are also contracts. They will -- there are more potential here. I am confident I'm going to -- you're going to hear more about that in coming years. And I -- it's too small, obviously and it's just beginning of a big journey but exciting journey because, as we show those in the Investor Day, the facts are there, and they are still growing.

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Operator [23]

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The next question comes from Bryan Keane of Deutsche Bank.

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Bryan Connell Keane, Deutsche Bank AG, Research Division - Research Analyst [24]

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I want to ask on the earnings outlook. We're still the adjusted EPS range of $1.70 to $1.80, which then makes a $0.10, pretty wide range for the fourth quarter. Was wondering if you could shade us to one side or the other of that range or maybe talk about what would get you to the high end or the low end of that range.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [25]

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I -- yes, Bryan, it just takes -- it's a number of factors that are going to determine where we come out in that range. The level of spending that we have on various initiatives, obviously, will have an impact at the level of revenue growth. So I mean we gave you a wide range, but we're very comfortable that we're going to be in that range. And where it comes out is just going to depend on a number of different factors that is hard to call at this stage. Just given the margin improvement that we had in the third quarter, that just depends on how much investment we make in the growth initiatives. So -- but we're comfortable with that range. And we'll see where that comes out.

And again, as we had mentioned at Investor Day, we do expect to get low double-digit type of earnings per share growth over the next 3 years. So it should set up well for next year and the years after.

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Bryan Connell Keane, Deutsche Bank AG, Research Division - Research Analyst [26]

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Is one of the wildcards for the fourth quarter just how much marketing or how much additional spend in investment goes in?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [27]

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Yes, yes. Marketing is certainly one of the key investment areas.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [28]

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I'm not sure it's a wildcard. We know what we are doing.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [29]

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Yes. No, I mean it's not a wildcard. We know what we're doing, but it just depends on how much we put forth there. And -- but yes, I would -- I wouldn't read too much into the wide range there, it's -- we're comfortable with where we are, and we're tracking according to our plans.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [30]

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Yes.

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Bryan Connell Keane, Deutsche Bank AG, Research Division - Research Analyst [31]

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Got it. And then wu.com, I mean it moderated slightly. I think it was growing closer to 20%. It moderated a little bit to 17%. Anything to read in there? Or any tougher comps or something that created a little bit of a modest slowdown?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [32]

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Not really. I would just say that 80% of the business grew at 25% in wu.com, which continues to be the highlight of the business, the cross-border piece. The domestic piece continued to decline. So that -- the domestic part of wu.com was slightly worse than last quarter but in the same range. So that's certainly having an impact.

And then as you saw in our notes, overall digital growth, including the white-label partnerships, grew more than 20%. So...

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Hikmet Ersek, The Western Union Company - President, CEO & Director [33]

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That includes also domestic.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [34]

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Yes, that also includes domestic, obviously all of that. So the total digital business, including the white-label partnerships, grew at above 20%. So we're pretty comfortable that we can continue to grow at that level with the total business. So -- I mean wu.com, we continue to have large expansion plans there. We think it's a great opportunity for the future. And we continue to add geographies and channels to that business.

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Operator [35]

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The next question comes from James Faucette of Morgan Stanley.

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Priscilla Kenmelly Russo, Morgan Stanley, Research Division - Research Associate [36]

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This is Priscilla calling for -- on behalf of James. Just a quick follow-up on the pricing question. Last quarter, you called out some pricing benefits, particularly in U.S. domestic, as you priced up some of your products there. Was that also in play this quarter? Or is there something else?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [37]

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Yes. That's certainly a key part of the overall pricing list. As you've seen, the transaction growth in North America was down 1% but revenue growth was up 2%. So we are continuing to try to maximize the overall value of the U.S. domestic money transfer business. So there is some pricing embedded in there as well.

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Priscilla Kenmelly Russo, Morgan Stanley, Research Division - Research Associate [38]

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Got it. And then just a quick question on India and how you -- how you're thinking about entering some of these new markets. You mentioned that you have to increase brand awareness. So how do you think about going to market there, increasing brand awareness? Is this providing potentially discounted digital services in India, so people know what the product looks like? Or is it just increased marketing spend? How are you thinking about that?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [39]

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I think it's a similar market. Of course, where we do it, everywhere. But don't forget that India had been for many, many years a receiving country. But the emerging new -- the mid-class Indians want to send money, and they want to use their account at westernunion.com to send money. More and more people, they want to use -- connect their debit cards, their credit cards or their bank accounts to westernunion.com, and that's the thing. What -- we do it in every country when we launch a new country, this awareness, but we are excited about the India long-term because we never did that in such a huge country, an outbound business. And I believe that is a new opportunity.

It shows an example of Western Union, how flexible Western Union is in many countries and how many opportunities we have, what kind of portfolio we have. And that part of investment will definitely happen, but it's nothing different than opening a new country.

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Operator [40]

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The next question comes from Ramsey El-Assal of Barclays.

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Ramsey Clark El-Assal, Barclays Bank PLC, Research Division - Research Analyst [41]

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I also wanted to ask a bit about pricing, a bit of clarification. How far along are you with the sort of infrastructure to enable more of an enterprise-wide rollout of the dynamic pricing? And maybe I just missed it, that's already something that's in place. I just wanted to clarify whether the pricing power that you've displayed in the quarter was related to that. Or is that something that's more of a future state sort of implementation? And then lastly, I -- kind of more conceptually on the same topic, I just wanted to kind of explore with you or have you comment on the degree to which that dynamic pricing -- true sort of AI-driven dynamic pricing might result in incremental pricing power as you're able to take price sort of more efficiently.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [42]

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Yes. I think, Ramsey, good -- great question, actually. If you look at our business being in 20,000 corridor plus, we've been doing dynamic pricing all the time. We adjust the pricing. You heard several quarters before and for several years, I was talking about street corner pricing and other activities. This is -- what we have done here is that we really go through more corridors. We multiple the corridors with some product adjustment and pricing adjustments. And also, if you download through westernunion.com, you will see also, you can choose between different channels when you send money to different countries, with different channels. It's like an airliner. We were adapting the pricing to the customer needs, to the demands and that has been different -- definitely a part.

Now what we are doing is that we tested in -- with artificial intelligence in certain corridors. We are really -- over the years, we will invest that because it's huge, right, 200 countries, different corridors, different needs. And -- but the artificial intelligence is definitely something will give us power.

The other thing is -- also, I want to mention again, the pricing environment generally has been stable. We've been -- definitely, we have some competition, but we -- our products, our speed, our channels, our brands makes it -- our compliance programs, our settlement programs, our platform makes it happen that our pricing environment has been stable.

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Ramsey Clark El-Assal, Barclays Bank PLC, Research Division - Research Analyst [43]

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Just -- my follow-up is on B2B and on your business payment segment. Can you talk about sort of which strategies you see? That's such a large opportunity. What sort of substrategies you see within that segment that are available to drive growth? Is it focusing more on AP automation or global disbursements? It's something that we see a lot of other companies, especially some startups, really making kind of hay out of. Just curious in terms of where you see the primary growth drivers in that -- or opportunities in that business.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [44]

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I think our core business is doing the volatility, global volatility on our core business, like hedging helps on the FX trading part, but I'm very excited about the verticals. The vertical acquisition, like the university acquisitions globally, and we're going to expand that also like medical tourism to acquisition of hospitals, paying really -- the consumer paying the bills in their local currencies and able to study abroad and/or their parents paid in local currency and sent their kids abroad to study. I think that's going to continue. The vertical's going to continue. But also our EDGE platform, which serves the SMEs, exporters and importers, where they meet online on the platform and really connect them, that's also a growth opportunity. So I believe, over the years, we will definitely have more a payments focus. You will hear more about that because it's a huge market as we demonstrated at the Investors' Day, and we have a small portion of the market. And SME, small-size SME, exporter/importers continue to be very exciting for us.

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Operator [45]

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The next question comes from Ashwin Shirvaikar of Citi.

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Ashwin Vassant Shirvaikar, Citigroup Inc, Research Division - Director and U.S. Computer and Business Services Analyst [46]

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So I wanted to start with trying to get more of a -- more granular information with regards to the segments in geographies, if you don't mind kind of going through, because I do see that there's some pretty good acceleration in the Middle East, South Asia piece, which I'm thinking maybe this is because of things like Saudi Telecom, that agreement. But there's also deceleration in many of the other segments. And normally, quarter-to-quarter, it's not this size of a move. So I'm kind of trying to figure out from a segment basis, if you can provide granularity.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [47]

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Yes. I mean just on Middle East, Africa and South Asia, just to reiterate some of my commentary, we had strong growth in Saudi Arabia and UAE. And then we had a slight offset from the hard currency issues in parts of Africa. But overall, the market improved dramatically from a revenue standpoint. So 4% revenue growth, 5% constant currency.

Saudi Arabia was driven by a couple of different -- well, primarily driven by the performance of Saudi Telecom. That had very strong performance, both transactions and revenue and then some price changes in certain corridors. And then UAE also had a good performance. That was driven by some agent incentives and other things we're doing in the local area as well as some price changes. And then overall, the transactions also improved. So Saudi Telecom, I would say, would be the #1 highlight for the region.

If you look at some other regions, Europe and CIS stayed relatively stable. Transactions improved there. That was largely driven by the Sberbank white-label business that we have, which had high transaction growth, less of an impact to the revenue side. North America was relatively stable to last time. Latin America was a little bit softer, but Latin America has been growing in the double-digit range for quite a while, right? So we saw Ecuador and Chile growing well, and that was largely business going to Colombia because of the migration patterns we're seeing from Venezuela to the neighboring countries.

And then Asia Pacific, we are doing price reductions there. So that helped the transactions trends a little bit. They're still negative, but it helped a little bit, but revenue for that reason stayed about the same.

So does that give you a little bit more color, Ashwin, on what you're looking for?

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Ashwin Vassant Shirvaikar, Citigroup Inc, Research Division - Director and U.S. Computer and Business Services Analyst [48]

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Yes, it does. I guess the one part that -- I mean I'm thinking any impact from Hong Kong and such in South Asia, maybe -- in East Asia, sorry, but that probably completes the picture there.

So then the other question I had was with regards to -- earlier this year, obviously, you guys took a look at the various businesses. You divested certain assets. Is there anything else left in that process? Could it -- when you kind of look at the stub of the other revenue piece, which, by the way, you guys continue to extract good EBITDA out of it, and then you look at B2B, anything that you could be doing inorganically adding, subtracting that is left to do?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [49]

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Yes. I would say that if you look at our strategic focus, it is really around cross-border, cross-currency money movement. So things that fit within that strategy, we like and will continue to own. And we may look for other things that help to supplement our strategy there and things that are not in that definition are potential candidates for us to look at divesting, but there's not much left really. The only domestic payments business we really have left of any size is in Argentina, and Argentina has its own issues, as you know. So there's not much more left there, but we're always looking for acquisition opportunities that help to supplement our capabilities or can help to supplement what we want to do strategically over the next few years.

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Ashwin Vassant Shirvaikar, Citigroup Inc, Research Division - Director and U.S. Computer and Business Services Analyst [50]

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Got it. And a quick clarification, if I can, on tax rate. Because I was under the impression the tax rate over the next couple of years would be stepping down, but in the quarter itself, it ticked up just a tad. I'm assuming this is just quarter-to-quarter fluctuation, and nothing's changed with regards to out-year tax rate going down?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [51]

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Yes. I would say the tax rate outlook for this year is very consistent with what we've been saying all year. So it's in that high-teens range, given the specific factors from this year. But we do expect it to step down into the mid-teens range for the next few years, and specifically, we expect that for next year as well. So we're very much on track with what we've said about the tax outlook.

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Operator [52]

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The next question comes from Kartik Mehta of Northcoast Research.

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Kartik Mehta, Northcoast Research Partners, LLC - Executive MD, Director of Research, Principal & Equity Research Analyst [53]

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I wanted to ask you a little bit about your ability to use, obviously, your physical distribution system for other channels. And Amazon specifically, maybe because it's so much in -- we've talked about it so much. But as you look at that particular product, has Amazon or you marketed the product outside the U.S. in some of the other emerging market countries? Or are you -- is that coming up?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [54]

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Yes. Not really. It's coming up. This is really -- Amazon, I believe that -- firstly, it's their product. They're going to promote it. We're going to upgrade -- we are putting our platform there. It's really -- the marketing activities really didn't start yet. It's coming up, I guess. And Amazon -- knowing Amazon, they're very customer-friendly. They want to have 100% good customer experience and everything, so a big global launch will happen.

At the same time, I have to say that so far, the test or, how do you call it, the start is growing pretty well. And we have countries like Colombia, it's doing very well, actually. And so it's really big launches coming up hopefully soon, Kartik.

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Kartik Mehta, Northcoast Research Partners, LLC - Executive MD, Director of Research, Principal & Equity Research Analyst [55]

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So Hikmet, it -- so it sounds like Amazon has shared with you that they want to launch this product globally, so there's more consumer awareness. Is that a fair statement based on your answer?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [56]

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Yes.

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Kartik Mehta, Northcoast Research Partners, LLC - Executive MD, Director of Research, Principal & Equity Research Analyst [57]

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Okay. And then just one question on pricing. Obviously, it's very stable. Is there a difference right now that you're seeing from just the physical distribution, the pricing in that channel versus the digital channel is more aggressive than the other? Or is one more -- I guess that's it. Is one more aggressive than the other?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [58]

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Which -- say it again, Kartik. Digital is more aggressive than...

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [59]

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Digital versus retail, do we see any differences on pricing?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [60]

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Well, depending on the corridors, I expect.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [61]

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Yes. I think it really -- that's exactly the answer. It depends on the thousands and thousands of corridors, the country pairs that we -- sometimes we're very aggressively priced, Kartik. And you know this quite well, but sometimes we're very aggressively priced. At other times, we don't need to be so aggressively priced. And in other corridors, if it's retail, for example, we are pricing to maximize the value of our domestic money transfer business, so it just depends.

And I think as we migrate to more dynamic pricing capabilities, ultimately, our goal is going to be to drive better lifetime value of customers. So that might mean that we reduce prices in certain areas. We increase prices and we take advantage of conditions because, ultimately, as you saw at Investor Day, we want that customer to not walk away without doing a transaction. So we want to price the product so that they do that last transaction with us, right? So it's just -- as we evolve to the more dynamic pricing capability, that's really going to be how we look at the business.

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Operator [62]

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The next question comes from James Friedman of Susquehanna.

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James Eric Friedman, Susquehanna Financial Group, LLLP, Research Division - Senior Analyst [63]

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So I -- you guys covered a lot of territory today. I'll just get 2 upfront. One, in terms of the compliance -- I'm sorry if I missed this, but are we still, Raj, in the 3% range? How are you thinking about that? That's the first one. And then the second one is -- oh, you mentioned Argentina, Raj. I realize that there's country-specific issues there. But what is the narrative around that Pago Facil? Is that still a strategic option for you? Or how should we be thinking about that? So one on compliance and the other on Argentina.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [64]

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Jamie, it was very hard to hear you. But first question was, I believe, compliance spend and the second question on Argentina Pago Facil?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [65]

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Argentina Pago Facil, yes. So let me -- James, let me try to address, and then you can let us know if we didn't -- if we have to say more there. On the compliance spend, the last few years, we've been very consistently spending roughly $200 million. It's been in that 3.5% to 4% range. We are trying to get away from giving specifics now on the compliance spend because it has been so stable. Obviously, we can never predict the future. It depends on where regulation goes, but we feel very good about our compliance capabilities and programs. So it's been very stable would be the message I would give to you there.

And then on Argentina, I didn't quite understand your exact question there. Do you mind repeating that one more time, on Argentina?

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James Eric Friedman, Susquehanna Financial Group, LLLP, Research Division - Senior Analyst [66]

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Yes. My question is -- and I'm sorry about the bad connection. I get the worst connection from Midtown Manhattan. But the Pago Facil product, is that...

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Hikmet Ersek, The Western Union Company - President, CEO & Director [67]

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Pago Facil?

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James Eric Friedman, Susquehanna Financial Group, LLLP, Research Division - Senior Analyst [68]

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Pago Facil, is that -- are there strategic options there? Or is that something you're sticking with? Or how should we think about that?

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [69]

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It's not a -- well, it's a domestic bill payments business. So I would just say that it produces good cash flow, but it's not necessarily -- it doesn't necessarily fit within the broader strategic area that we want to focus, which is cross-border, cross-currency money movement. But we like the Argentina business. It's been a good producer for us, and it's a -- it is a part of our portfolio. And that's what we have at this stage.

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Hikmet Ersek, The Western Union Company - President, CEO & Director [70]

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I think the Argentina business has been part of our portfolio. We do use locations, with Pago Facil locations also for our inbound-outbound business. And it has been a stable business for many years. And we have good management there. And -- but we are -- our focus continues -- it's a very small part of our business. Our focus continues to be in cross-border, cross-currency.

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Operator [71]

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The next question comes from Andrew Jeffrey of SunTrust.

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Andrew William Jeffrey, SunTrust Robinson Humphrey, Inc., Research Division - Director [72]

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It's interesting to see this -- to me, this kind of juxtaposition between the revenue growth of the business, which is clearly stabilizing and picking up in some cases, and then this commitment to return of capital, which I think the markets really like this year, by the way. But what I'm trying to understand is, is there some point, recognizing you've given us this multiyear plan, where if you see real success with some of these newer initiatives that you're calling out, especially considering your compound multiyear revenue growth is essentially being driven by essentially 20% of the business, and where you choose to reinvest and maybe accelerate growth around some of these newer initiatives? Or how are you going to evaluate that versus just sort of being dead set on returning this capital to shareholders?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [73]

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I mean capital -- we are very committed to return the capital to the shareholders, and our strength -- cash flow is continually going to be there, and we are very committed. But let me step back and tell you why we are so successful with our opening the platform, why we believe that we're going to be successful is the correct maybe -- and the first signs -- or it looks like, we're going to continue to be successful.

We developed a platform over the years which gives us the capability to offer our platform to third parties, which the others don't have it. The compliance capability, the settlement capability in 137 currencies, real-time capabilities and accounts and wallets and parts. It's a huge platform for 200 countries, capable -- legally capable to operate in 200 countries. These are a huge competitive advantage, and we have them already. Now we just adjust our business model to open our platform to the third parties, which doesn't need additional big investments. Really, we are looking at our processes, optimizing our process to open our platform to third party. That's a big advantage that maybe others don't have it.

So our platform, in the past, served the Western Union customers. Now we are really opening to -- the platform to solve an issue about third parties. They're going to move money anyway, but in a hard way. But if they use us, it will be easier way, and that's the incremental part of that revenue. Of course, we will look at that if there are incremental opportunities, we are going to invest there. But I don't assume that we will have a huge, different investments, which will affect our margins, and we are very committed to our 3-years margin expansion.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [74]

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Yes. The only thing I would just add is that, as we had said, Andrew, on -- at Investor Day, we are saving -- we're driving some more savings than just the $150 million by 2022 and that is with an eye towards investing back in the business to drive some of these longer-term growth opportunities. So we believe that we have enough investment allocated to some of these things. And we'll just have to see how the experience is over the next few years as these things develop.

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Andrew William Jeffrey, SunTrust Robinson Humphrey, Inc., Research Division - Director [75]

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Okay. And then as a follow-up, the gross margin, the cost of services as a percent of sales has been pretty stable. It's been increasing a little bit. Are we -- to the extent you're driving operating leverage, is it coming more from OpEx as opposed to cost of goods? Because I noticed you haven't been capitalizing a whole lot of commission costs. It certainly would seem like it's a fairly benign agent environment.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [76]

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Yes. I would say that we -- certainly, the fixed expenses will be an area where we get a significant amount of our savings. But we also, as you've heard, are driving for efficiencies in our cost of sales, right? And so both will certainly be a factor. But -- and we want to try to drive leverage.

As we look at commissions, it's our #1 cost item in the company. So we have to look at that. We have to find a way to be more efficient there, and we believe we have the right strategies there. And so yes, we're getting leverage on our entire cost structure, I would say. And that's a part of the overall formula. As we get the revenue growth, we also get leverage as we keep those costs pretty stable.

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Operator [77]

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The next question comes from David Scharf of JMP Securities.

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David Michael Scharf, JMP Securities LLC, Research Division - MD and Senior Research Analyst [78]

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I wanted to just follow up with one more question on the XP platform initiative. And I'm wondering, clearly, all the investments in compliance over the years have positioned this to effectively outsource those programs and relationships. And I just wanted to sort of double check, is there any additional compliance risks or maybe just requirements that you could potentially foresee having to address, based on opening up your API and inviting third parties to leverage the platform?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [79]

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Well, moving money cross-border, cross-currency is always complex. It's very regulated. And obviously, the complexity of the business -- understanding the complexity of our business is a competitive advantage for us, and we know how to do it. But at the same time, there is also risk always, of course. But we believe we are very well positioned to answer or to respond to many questions and many regulatory requirements that global regulators have. If we think about 200 countries and 137 currencies, it definitely has something.

I don't see additional risk because if you open your platform already to the banks, it's a kind of "know your customer" environment, it -- already done, but our team is very diligent to choose the right partner. Our team is very much investing to look what -- how we can move in a very compliant way worldwide. And we are very dedicated. We have a great compliance team. We have a great legal team. And they are really within the -- advising us, and they are within the business model here. And that's -- we see that compliance and anti-money laundering activities and responding to them as a competitive advantage.

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David Michael Scharf, JMP Securities LLC, Research Division - MD and Senior Research Analyst [80]

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And I would imagine there's no difference in the way you vet agents as well; thank you.

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Brad Windbigler, The Western Union Company - Senior VP, Treasurer and Head of Payments Finance & IR [81]

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And Andrew, we have time for one more question.

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Operator [82]

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That question will come from Tim Willi of Wells Fargo.

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Timothy Wayne Willi, Wells Fargo Securities, LLC, Research Division - MD & Senior Analyst [83]

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Great. Two questions, the first one was just a housekeeping on the modeling. Raj, could you go back through what the margin impact was from the Speedpay divestiture? I just want to make sure I've got that accurate sort of in my model and thought process over the next couple of quarters.

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Rajesh K. Agrawal, The Western Union Company - Executive VP & CFO [84]

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Yes, yes. I mean if you look at our financial tables, we have quite a bit of detailed information in the tables. So last year, Speedpay and Paymap generated about $370 million of revenue and $110 million of direct profit, and they had a margin benefit to the business of around 70 basis points. And then this year, we had a 40 basis point benefit in the first quarter and then no benefit in the second quarter. And then we sold it, obviously, in May. So no further benefit there. So it should give you a lot of details in the tables.

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Timothy Wayne Willi, Wells Fargo Securities, LLC, Research Division - MD & Senior Analyst [85]

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Okay. I'll go back through those.

The second question I had was just on wu.com, given the length that you've now had this business and the success. And obviously, one's assuming lots of repeat customers that have probably been with you now for some time. I guess going back to an earlier question about pricing, just any insights or color you could share around -- as you sort of test and think about pricing and the stickiness of customers given the duration of how long they've been with you, and just any sort of thoughts around engagement. Do you think people are truly exclusive to wu.com? Or do you think there are people out there that their activity might say, hey, they might have another digital money transfer relationship on their smartphone as well because they got comfortable with the ease of using wu.com, maybe thinking about trying out somebody else's service? Or do you feel like people are still pretty exclusive to you?

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Hikmet Ersek, The Western Union Company - President, CEO & Director [86]

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No. Tim, great question, actually. As you know, the big difference between dot-com and [a walk-on] is that at the dot-com, you have to preregister yourself. We have it -- really a customer acquisition in the beginning. And once you are on the system, when we do the -- [know your] customer and everything, you really -- the loyalty is huge within the westernunion.com.

One of the reasons is that no one can match our distribution network worldwide. So you collect funds via dot-com, and you can send money anytime to 1 of the 500,000 locations or 1 of the billions of accounts and in real time. And it took us a while to develop the -- both sides, and that makes the customer loyal. Once you can send money to your grandmother in Uganda to the next corner in minutes, drop money in a location, or to India to an account in minutes, really going in minutes without any issues, that loyalty is definitely something that we admire.

Saying that, in the new countries, Tim, we are very focused on acquiring new customers and the existing countries are real -- which we've been longer time with westernunion.com, it's all about customer experience and customer loyalty. And I am -- continue to be excited about the westernunion.com. The strategy is definitely investing in westernunion.com, all about the customer.

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Brad Windbigler, The Western Union Company - Senior VP, Treasurer and Head of Payments Finance & IR [87]

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Thanks, everyone, for joining. Have a good evening.

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Operator [88]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.