Good day and welcome to the Western Union first quarter 2019 results conference call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Mike Salop, Senior Vice President of Investor Relations. Please go ahead.

Thank you Andrew. On today's call, we will discuss the company's 2018 first quarter results and our full year 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 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 & Exchange Commission, including the 2018 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 on our website, westernunion.com, under the Investor Relations section. 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 distribution of any transcription of this call. I would now like to turn the call over to Hikmet Ersek.

Thank you Mike and good afternoon everyone. Revenue trends were softer in the first quarter and industry growth appeared to slow but we remain on track with our full year expectations. We expect growth and margins to grow throughout the year as we gain traction with new opportunities such as Albertsons and Dollar General and face less challenging comparisons from currency and pricing actions in the prior year. The digital business continues to drive our results with 19% transaction and constant currency revenue growth in the quarter for westernunion.com money transfer. Cross-border digital growth was much higher, but declines in U.S. domestic money transfer business continue to affect both westernunion.com and overall C2C growth rates. Geographically, our U.S. outbound and U.S. to Mexico money transfer business has delivered good results and Latin America outbound remained strong. Trends in Europe in certain countries were mixed. And Middle East revenues continue to be affected by the price reductions implemented in the first half of last year. In business solutions, we achieved constant currency revenue growth for the third straight quarter driven by strong growth in Asia-Pacific and Europe. Overall, our core business expectations for the year have not changed from our original projections and we are not standing still. We are taking additional actions to improve our results going forward. In the next few days, we expect to complete the sale of our Speedpay U.S. domestic bill payments business for approximately $750 million. This represents the first step in our efforts to streamline our model and focus on our core cross-border businesses. Our overarching strategies remain, focus on driving digital expansion and growth, offering our cross-border platform to new business areas and generating operating efficiencies. With digital, in addition to westernunion.com and mobile geographic expansion, we continue to build our account payout…

Thank you Hikmet. First quarter revenues of $1.3 billion declined 4% compared to the prior year period, while adjusted constant currency revenues, which exclude Speedpay revenues from both the current and prior year, increased 2%. Currency translation, net of the impact of hedges, reduced first quarter revenues by approximately $77 million compared to the prior year, primarily due to continued declines in the Argentine Peso. The decline in peso negatively impacted total revenue by four percentage points, while the effects of inflation on our Argentina businesses is estimated to have positively impacted both reported and constant currency revenue by approximately two percentage points. In the Consumer-to-Consumer segment, which represented 79% of company revenues in the quarter, revenues declined 3% or were flat on a constant currency basis, while transactions grew 2%. Total C2C cross-border principal increased 1% or 5% on a constant currency basis, while principal per transaction was down 2% or increased 2% constant currency. The spread between C2C transaction and revenue growth in the quarter was 5% with a negative 3% impact from currency. Mix had a negative impact of approximately 2% in the quarter while pricing was flat compared to the prior year period. Turning to the regional results. North America revenue grew 1% on a reported and constant currency basis, while transactions were flat. The U.S. to Mexico quarter delivered strong revenue growth in the quarter, driven by westernunion.com and we made significant share gains based on the latest Banco de Mexico data through March. Our other U.S. outbound business also generated good revenue growth driven by sends to Latin America and Asia. However, continued declines in the U.S. domestic money transfer business largely offset the U.S. outbound strength. In the Europe and CIS region, revenue declined 3% or increased 1% on a constant currency basis,…

[Operator Instructions]. The first question comes from Bryan Keane of Deutsche Bank. Please go ahead.

Yes. Hi guys.

Hi Bryan.

I want to just ask about pricing. I know you guys did some pricing actions in North America and the Middle East. It looks like transaction growth dropped a little bit. Usually you see the opposite effect. You see with pricing, you see an increase in transactions. Overall transactions was, I think, 2% for the quarter, was down from 4% last quarter. So just trying to figure out what was the impact from pricing? Did you guys get the impact you expected? And how much of this is just a little bit of the difficulty going on into the economies worldwide?

Yes. Bryan, this is Raj. Let me start off. In the Middle East, most of what you are seeing on the revenue side is related to price reductions we made in the second quarter of last year. Transactions did fall off a little bit, but there are number of different things happening in that region. Middle East and Africa, the revenue was a little bit better in some of the key markets like Saudi Arabia and the UAE, but we also had a little bit of softness, both in transaction and revenue trends in our Africa outbound business. Just some of the markets there are being impacted by hard currency shortages. And so we are just trying to manage through that. So there is some opposite impacts that are impacting the business. But we do believe that the trends will improve as we go past the second quarter just as we anniversary some of the price reductions there. And then in North America, there was a little or price optimization or increases, I would say, in the quarter, but nothing material there to really talk about. The domestic money transfer trends, the transactions there are a little bit worse even though revenue trends were probably similar to the fourth quarter. So that could be some of it where the DMT business is really driving down the results in North America.

Okay. I got it. And then I think, Hikmet, you talked about an Analyst Day towards the end of this year and talking about some long-term initiatives. Maybe could you just maybe a preview of some of the things that you are thinking about for that Analyst Day and how you guys might talk about some of these long-term initiatives for the business model?

Sure. Yes, we are excited about the coming up Investors Day because we believe that we have an exciting story to tell. We are currently working on it. We are really looking at our business model which we can use more technology and more artificial intelligence, which we have already. It's not additional investment. We can optimize our current organization and running this business more efficiently. Starting from variable cost to fixed cost, we are looking at that. But at the same time, we are driving the expansion possibilities like digital expansion and really offering our platform which is unique, offering cross-border solutions to new payments providers. That's the story basically. We are currently revaluating what the outcome will be. We have the first internal plans but we are really going on the details and we would like to share that with our investors on the Investors Day coming up, probably September, end of September or October, end of Q3 or beginning of October.

Okay. Great. Thanks for taking the questions.

Thank you.

Thanks Bryan.

The next question comes from Jason Kupferberg of Bank of America Merrill Lynch. Please go ahead.

Thanks guys. I just wanted to ask actually a follow-up there just in terms of some of these newer initiatives that you are going to talk more about later in the year. I just wanted to get your viewpoint on why now, why is this the right time. It doesn't seem like WU Way was that long ago. It seems like that was a successful effort. So is this about taking WU Way to the next level? Or just wanted to get a sense of why this is the right point in time to take another cut at efficiency initiatives?

I think again, Jason, that's an excellent question. Why now? As you look at our business, so 2016, we really were investing a lot on the compliance programs on the anti-money laundering efficiencies, on the technology. Since end of 2016, 2017, we have a much more stable results, we are really the resilience of our business give us confidence that we can run this business in a much more efficient way. We do have licenses in 200 countries. We have invested in the technology part. Now it's really the reorganization. And in the past, we were all about expanding globally. We are in 200 countries, whereas the other competitors are still struggling expanding globally. We have been already there for many years now. We are really looking at how we can offer our global platform to new partners. And we can do that in a much more efficient way with artificial intelligence. We have been working with our teams the last few weeks. Actually not few weeks, I will say the last six weeks, in a very detailed strategic plan. And then we will like to take that through a more detail plan and present that to the shareholders. We believe that this could go to a margin expansion that could be in a much more better margins here, because it's changing the business model from a distribution model to more of a customer oriented business model. Gaining more consumers and having consumes more in our digital way will give us efficiencies. For instance, dropping money on an account, it's much more efficient than dropping money on a location because of the commissions and be could gain there are also more traction and there is a plan behind that. We will like to share that. Does it make sense?

Yes. That does make sense. Maybe just shifting gears, maybe one for Raj, just on the guidance side. So I think on an adjusted constant currency basis, excluding the Argentinian inflation benefits, we need to get from 0% in Q1 to the unchanged full year guide of 2%. Can you kind give us that walk of the pieces of how we get there? I know the comps do get easier. You talk about Albertsons and Dollar General. Can you maybe quantify how much they may benefit the topline during the rest of the year?

Yes. It's all the pieces that you mentioned, Jason. We had a tougher comparison to Q1 of last year. We also had a slightly negative calendar impact in Q1, which will alleviate itself as we move through the course of the year. And then Albertsons is now fully ramped up. That gives us an incremental 1,000 locations. Dollar General's now also fully ramped up and will contribute more. We are adding about 14,000 locations with them. We don't quantify the exact impact of each one but they are certainly going to be contributors. And then we are also going to be expanding some digital partnerships later this year that will also add to the overall picture. So we feel confident about the full year outlook, even though Q1 is a little bit softer.

Okay. I am sorry, just one last quick one. On WU.com, I know you grew to 19% but you did call out DMT as a headwind. How could we think about maybe the Wu.com number, ex-DMT? I am just trying to see if there is any underlying change in the trend? Thanks.

We grew 19% all-in but we haven't given that number specifically, but we would be in the mid-20% range if we took DMT out of the dotcom number.

And overall, I think Raj, in 2018, our DMT business was about 8% of our revenue.

It was our consumer revenue.

Consumer revenue. It was consumer revenue, Jason, as you recall. We don't give that. We said that we are not disclosing in the future but it's declining and has an impact to our total number. But cross-border is still healthy, very healthy growth rates.

Yes. The international cross-border is really growing at the strongest level in dotcom and then we are getting pretty good growth in our U.S. outbound business. And then the DMT part of digital is declining.

Okay. Terrific. Thank you for the color.

Sure.

The next question comes from Tien-tsin Huang of JPMorgan. Please go ahead.

Hi. Thanks. Good afternoon all. I will ask similar to Jason on margins for the year, though. Starting out 2018, you mentioned Speedpay removal, I think is dilutive, but still guiding 20%. So I guess with revenue improving you see will some margin lift, but what other levers do you have to get the margins higher than the balance of year?

Yes. Hi Tien-tsin, this is Raj. We also had some acquisition and divestiture related expenses in Q1 that we called out and that's not necessarily representative of every quarter. So that will help a bit. The revenue lift that we get the rest of the year will absolutely help on the margin expansion. And with the Speedpay divestiture, coming into the year, we had about 20% margin outlook and we still have 20%, because even though Speedpay is a bit negative, it could be a little bit above or a little bit below the 20% number. So still confident that we are going to make the full year. And the revenue growth will help a lot and our expense base should be relatively stable as we move through the course of the year. So that's why we have confidence around that 20% number.

Okay. Thanks for that. Just a quick follow-up, advertising. I have noticed a lot of the pay to account advertising even on TV. So was that reflected mostly in Q1? Could we see more of an advertising impact for the balance of the year? I am curious what kind of payback you might expect from something like this if it's a change from before?

Yes. On the marketing and advertising front, we are likely to have little bit higher spending in the first half of the year than the second half. Second quarter is typically a higher spending quarter, just given Mother's Day and other things. So that's roughly --

Tien-tsin, on the account payout, I think it's one of our strongest growing. It's still small of course, but strongest growing channel. People are using more and more for account payout. If you use your mobile app, you tend to choose between cash payout or mobile payout. There also price differences to automate the customers. It's going very well. Transactions and revenue growth doing very well. So we are advertising, especially in some certain corridors like India, it's definitely something that is growing fast. But also from Europe, people are using more and more account payout. And that's long term also helps in our agent commission structure because of the mix. So I think that I am excited about that. Currently, we have about four billion accounts worldwide which can drop money directly. And we are very much pushing that also to optimize our revenue growth and our commission structure.

Yes. That makes sense to advertising. Thank you.

Thank you.

Thank you.

The next question comes from Darrin Peller of Wolfe Research. Please go ahead.

Nice, guys. Just to start off. When I think about strategically, the DMT, the domestic business, again just revisiting, is there anything you guys could do to, first of all, how profitable is that for you right now? Could you disclose how much that contributes to earnings? And then is there anything you can do similar to what have done with Speedpay? Would it make sense in someone else's hand? I know it's declining but still potentially cash generative for someone. And then I guess, taking a step further, is there any other ways to enhance the business model in terms of specifically C2C digital beyond just the organic trends you are seeing with capital brought in by Speedpay and others? Should you buy someone else's, does it become a greater priority? Thanks.

Yes. On the profitability of DMT, we haven't really disclosed it, but it's a very profitable business for us. It probably generates more profitability than its size. But we haven't really gone into the actual specifics of that. Selling DMT would be challenging because it's so integral to everything that we have. I think that's what your question was, Darrin. We have DMT customers that are also international money transfer customers and vice versa.

And also, as you know, DMT is one of the big advantage of the MT as a cash payout. We have certain customers. They use DMT, our U.S. DMT to send money via mobile but payout and cash in minutes. And that's unique. That customers existing. However the competitors like Zelle and Venmo having zero fees on a direct-to-direct, that's where we feel the competition and it's hard to compete against zero fees. And so I think that we are really looking at these customers we currently have. It's high profitable business and we are serving this customer in the best way like we do so with U.S. outbound customers.

And Darrin, can you just repeat your last question. There was a third question around C2C digital?

I guess I was just wondering if there was any other use of capital around some of the proceeds from Speedpay. You talked about debt paydown and buybacks. But have you raised in priority any type of tuck-ins that could help expand some of the growth profile of your businesses?

Yes. Our going in plan is to buy back stock as we articulated. But we also are always looking for acquisition opportunities, whether it's digital or something else.

Let me just give a shot on that. We do look at many opportunities, given the business. We are not standing still, given the operating performance a little bit flat. And we are really looking for M&A opportunities also which will continue to get additional revenue to our cross-border engine. So of course, it has to be at right price, right strategic fit and that's what we are doing. And we are really evaluating. Now we can do these things since we feel much better with our platform. And as I mentioned earlier at the call, as we have now the operating efficiencies and we are for operating efficiencies, I think we can also when we go to the market, we can include new revenues terms to our engine much better than we did it in the past. I think having an efficient cross-border engine will allow us to be more active on the M&A front.

Okay. So just one last follow-up is just around, the Amazon news that we have seen from you guys a couple of quarters ago, we thought was pretty promising. Have there been any other marketplaces like that where know you can use your network for bigger and better things even with what you are doing today?

On Amazon, first of all, we are expanding with Amazon together the countries we are in, right. I think there will be hopefully some recent announcement our shareholders will like it like I it and our shareholders in Amazon will like to be partners like to serve new customers. Collecting funds in the local currency, turning that to dollar immediately, which is so that you can buy locally, you can buy globally, pay locally, it's enormous and we are looking also for other partners and more announcements to come on that. We have our division called cross-border solutions division which is a sales organization which offers our platform to big partners and it's all about closing that and expanding Amazon but also signing new partners.

Okay. Great. Thanks guys.

Thank you.

Thanks Darrin.

The next question comes from Jim Schneider of Goldman Sachs. Please go ahead.

Hi Jim.

Hi. Good afternoon. Thanks for taking my -- Hi. How are you? Good afternoon. Thanks for taking my question. I guess just maybe at a 50,000 foot level, can you maybe kind of give us a sense regarding the divestitures and the M&A contemplating, where do you want to take the company, in say, two years from a business mix perspective? Is the thought that you want to be just a much more larger scale C2C business with a lot more digital exposure and maybe less B2B exposure? How are you thinking about the direction the company is going to go in given what you done with Speedpay and what you might be contemplating elsewhere?

Excellent question, Jim. That's why we want to have the Investors Day to go more deep on that. But let me try to give you a high level thinking behind that. Over the years, we created that cross-border engine, we call it cross-border platform which allows us to settle 137 currencies in minutes and turn that really, offer that really now, not only to Western Union customers which are the C2C customers, really offering also that to C2B and B2C customers. And that's where our platform is unique. Not everybody has that. We have 200 countries license. We have compliance programs which is driven by artificial intelligence. We have a technology, which is really unique. And putting that all in one platform, putting that in the cloud, that's something we are doing currently. With that, Amazon is only one example to go out of our C2C customer, really using that Turk brand, which is the Amazon app called and offering our platform to Amazon so that customers worldwide are able to shop Amazon online. And these are kind of things which I am trying to take the company to the next level. C2B, B2C and C2C is definitely something in our hearts. And other examples is, Jim you know, we talked a little bit, is the University pay. The student pay product is basically acquiring universities. And so people can globally pay their are fees locally and study in another country. An example, there are about 200,000 Chinese students only in Spain. And so we can offer that. People pay in local currency and can study in Madrid or Barcelona immediately and get their visas to go abroad. So these kind of things are definitely something we are looking at. It's not only Western Union branded products, C2C product but also other verticals to offer our platform.

That's helpful. Thank you. And then, maybe just as a follow-up. Aside from the macro pressures you are seeing in a, the corridors, can you maybe talk about whether you think the bigger impact on some of the transaction deceleration you are seeing is more due to things like the hard currency shortages, et cetera? Or is there any kind of change in migratory trends that's really driving that weakness as well? Thank you.

Well, generally, Jim, our cross-border business is healthy, as I mentioned and as Raj mentioned earlier, right, which we really believe on our country-to-country peers, we are healthy. We do have some softness in the Middle East. We have some softness in some part of Europe. But generally, I would say that our U.S. outbound business, which is a major business and European Union outbound like France and Germany has been doing very good, good results. Even in Saudi Arabia and UAE, we see some, if you put the pricing to that, some improvements in the recent quarters. I would say that the impact is really the U.S. domestic money transfer business has impact to our business from transaction wise. And we always say that our competency is in cross-border, cross currency and that's where we are focused and I feel resilient also. Even we don't see the pricing pressures. The prices are stable in cross-border, cross currency. I think that operating in 200 countries, serving more than 20,000 corridors, it's really a competitive advantage.

I mean the remittance principal growth based on the World Bank data, Jim, is a little bit slower this year than it was the last couple of years. So that may be some of it overall in terms of overall market. But it is expected to keep growing in that low to mid single digit range in terms of principal growth, cross-border principal. So the market dynamics should continue to be okay. A little bit softer this year.

I think it's softer, I think also competitors gave some numbers there where their numbers were also softer. But generally, I would say, still healthy business.

Thank you.

The next question comes from Ashwin Shirvaikar of Citi. Please go ahead.

Hi Hikmet. Hi Raj.

Hi. How are you?

Hi. How are you?

Good. Thanks. I hope the same for you. So my first question is with regards to the U.S. domestic money transfer trends is kind of worse. The reason I am asking is, given the backdrop of a higher number of agent locations because you have been adding agent locations, what's going on at that level? Is it just it takes time for agent locations to get more productive? Because then that's a broader question too because over the last couple of years you guys have added a number of locations. WU.com is in more countries, but your growth rate has not necessarily accelerated. So how should we think of that?

Well, first of all, let me start with agent locations. The recent agent locations, the Albertsons and Dollar General just has been added, Ashwin, a few months ago and activation of them takes time. We know that especially on the strategic areas that you add locations, it does bring more transactions. That's from the send side. On the receive side, having 550,000 locations globally is a big advantage, Ashwin. So you can use your phone and send money directly to 550,000 locations in dollar and we turn that in Vietnam or in Chile or in Finland immediately to their local currency, that not many companies can do that. That being present been on that countries in last mile is the biggest advantage. That's why we are paying out in 137 currencies. Not many companies can do that, that will be. On the new expansion of westerunion.com, yes, it takes time. Our growth basically comes from U.S. and some European Union outbound. As you recall, we were first to U.S. few years ago, then expanded to European Union. Now we are all over the European Union. We recently, I was just last week in the Gulf states in Middle East. We opened seven new countries there to outbound business, especially I am excited about that sending money to South Asia. Since the promotion we know that we signed many, many new customers on our mobile apps, on the westernunion.com mobile apps. So it will take some time but the 19% growth on dotcom, it's a very healthy growth. If you compare it with few years ago and where we are, we end this year more than $500 million of revenue in the dotcom business and it's still growing by 20%. The base is much larger and we are still growing with 20%. It's a good success, I guess.

Great. I was thinking within the context of your overall business. But the second question is quite different from the first is, in terms of how much was the acquisition and divestiture expense in 1Q? In other words, what's the normalized EPS for 1Q? And if you could also provide what compliance expense came in at for the quarter and for the expectation for the year?

Yes. Ashwin, we didn't break out but I think, just think about the annual outlook. We said that we expected about $0.02 worth of impact from acquisitions and divestiture related expenses. Obviously that could change depending on the level of activity. But that's what we have currently assumed. So that should give you a sense of how much that could be for the year. And then from a compliance standpoint, I would say the cost were relatively consistent. We haven't broken that out but we have been able to stabilize our compliance costs over the last couple of years. So nothing specific to call out there.

Okay. Understood. Thank you guys.

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

Hi guys. This is Ben Budish, on for Ramsey. I wanted to ask about another question on your operating margin. Maybe this is something best left for the Investor Day, but talking about some of your longer term efficiency initiatives and with the growth in the WU.com business, is there a path there to getting the operating margin back in the like mid-20s? Or is that more dependent on reacceleration in your revenue growth?

Yes. I mean I think it's something we should probably say for later next few months. And certainly Investor Day will give you more color on some of our initiatives. We are going through the process right now, I would say, in identifying how much opportunity there is and what we can take to the bottomline, right. And in past exercises, we have sort of reinvested the money to drive that growth but we also are looking for ways to drive more efficiencies, ultimately better margins. But we still are going through that process to evaluate how much that could be.

Okay. Fair enough. If I could ask one more just on your APAC business. Could you maybe give a little more color on what you are doing tactically this time to turn that business around?

Yes. Asia-Pacific is certainly a focus area for us. The good thing is that it's only 6% of our consumer revenues. And so it is relatively well contained but the negative trends in the quarter were driven by Australia, Korea and New Zealand and each market has different issues associated with it. Some are more competitive in nature, some are more just economy related. And then digital continues to be a heavy portion in the Asia-Pacific market. Right now, digital for us is only about 11% of the total Asia-Pacific market and we want to drive that to be a much bigger number over the next few years because that is the way the market is heading. And so having more mobile capabilities, more account funding, more account payout and having more of those kinds of capabilities. So these are some longer term things that we are trying to do, Ben. And we are also trying to tactically fix things on a short-term basis as well.

And in Asia-Pacific, most of the market is a receiving market. Few markets like Australia, New Zealand, Hong Kong, Singapore, Malaysia are outbound some markets. But if you look at total Asia, most of the Southeast Asia, China and India are receiving markets. So it is much depended on how we send money to these countries. And the other thing is also, we do have some challenges, as you said, in Australia and in New Zealand with our retail, but the dotcom business and the digital business is doing pretty well there.

Okay. That's great color. Thanks so much.

The next question comes from James Faucette of Morgan Stanley. Please go ahead.

Thanks very much. Most of my near term questions have been answered. But I did want to ask a modeling question and a more strategic operational question. The first is, with the sale the Speedpay business, is there any seasonality that we should be aware of that we should incorporate in your forecast or models?

I wouldn't expect seasonality. Do we have anything, Mike?

No. Actually the tables that accompany our press release, we actually have the Speedpay by quarter pro forma for last year. So you can look at that.

Okay. Great. Yes, I missed that. Okay. Thank you. And then my second question is, your comments on using, implementing artificial intelligence and machine learning, et cetera to improve, among other things, AML and KYC requirements. How do you think about like that ability to not only help you maintain compliance but then ultimately bring down costs potentially as far as maintaining AML and KYC compliance? Is that a possibility? Or do you feel like you are probably going to, it's just a new avenue of investment to be able to maintain your capabilities there?

No. It's the first part, actually. It's definitely. We have it and we use it and we want to expand it. Currently we use a lot of artificial intelligence, especially in our compliance programs, know your customer environment, the transactions, monitoring and that helps are a lot on our compliance programs which we advanced since we starting to heavily here. And we have also a good team who really knows that field well. So it's the existing artificial intelligence. But we could use this also in other parts of the company is at dynamic pricing, for instance, like an airliner, all these things that we really think that we could do, we do have, we think that we could have some revenue opportunities there. And also you know, using the technology of artificial intelligence will give us have a better access to front line associates, communicate them in a better way. As you recall that we have about 550,000 locations. Let's say two times of them is through front line associate for a location or about million people promoting Western Union daily, right. And how do we communicate with them in a very efficient way. All those things are something that we will like to share during our Investors Day. And that's exactly what Raj mentioned earlier, that's exactly what we are planning and putting together all those things to give you more better outline for our future growth and future efficiencies.

Great. Thank you so much.

The next question comes from David Scharf of JMP Securities. Please go ahead.

Good afternoon. Thanks for taking my questions. Two of them. First off, Hikmet, I believe in your prepared remarks you specifically called out your belief that you experienced market share gains in U.S. to Mexico that may have been triangulated from Banco de Mexico?

Yes.

Can you expand on that?

David, they don't want, but I will take it. It's a good news, yes. Banco de Mexico data shows that we are gaining market share, yes.

Got it. And is there any magnitude you are able to articulate or any internal sense of where that share may have come from or if it was broad-based in terms of competitors?

As you recall that we invested on our network there. The last two years, we did a lot. We had OXXO. We had other kind of locations. But one of the big changes also, we started through our APN network which means account payout network. That shows really good growth rates in account payout. And also dotcom business to Mexico has good results, the digital growth. So these are the things that helps us to gain market share. By the way, as you recall also, we have three brands there. We have Orlandi Valuta and Vigo additional to our Western Union brand. We adapt our products to the customer needs. That helps definitely also to gain market share on this specific corridor.

Got it. Understood. And then as a follow-up. I believe in response to one of the questions about the expected ramp up of revenue throughout the year more backend weighted, among other things you highlighted some of the additions like Albertsons and Dollar General. I am wondering, when we think about a big grocery chain like Albertsons kind of a regional/national chain, when we look at things like a Safeway or a Kroger, other examples, what is typically the transaction profile out of big grocers? Is the bulk of it domestic money transfers? Is most of it outbound? Just trying to get a sense for in addition to how that helps the topline, what it means in terms of profitability per transaction?

So if you look at our business, the U.S. outbound business is huge, right. We like U.S. outbound business, sending money from U.S. to 200 countries in minutes, I think nobody can beat that our way and we have a lot of competitors that we are competing daily on the markets, right. But I think during that environment, we are doing pretty well good job. So agents like our product. Most of our agents have been, on send side have been with us more that 17 years, Mike?

20 years.

20 years already. So 20 years and they like that product because they bring customers in their locations. And the customers are from migrant population from different countries but at the same time also people you want to send money support their loved ones globally.

Yes, I might have misspoke. I guess what I was trying to understand is the grocery vertical in particular and Albertsons as we compare it to like a Kroger.

Yes. There is probably, you have customers that are, it's probably a representative customer set from the rest of it. But it not unique in nature from a grocery store chain standpoint. Because U.S. outbound is such a large business, you are going to have more customers doing that than the domestic business part of the business. But it's going to be a mix. And it's going to probably depend on where some stores are located and which neighborhoods and those kinds of things will have an impact on the kind of customer base you have within a chain, within a store.

Got it. Okay. Thank you Raj.

The next question comes from Jeff Cantwell of Guggenheim Securities. Please go ahead.

Hi. Good afternoon. Thanks for squeezing me in. [indiscernible]. Your launch of digital in the Middle East, I believe you launched digital in seven countries last week. Can you just tell us a little more about that and maybe just give us a general feel, not to ask you to preempt your Investor Day, but it just seems like your Asia digital strategy, certainly over the 12 months, now your Middle East, digital launch, it just sounds like a possible shift towards more topline growth, given how large those TAMs are. So is there anything you can tell us about the magnitude of the opportunities there? And any color around timing and size of the impact to the extent you are able to today, would be great. Thanks.

So generally, as you recall, just from strategic point of view, the digital customers are new to our network, 80% of our dotcom users are new to our network that didn't use the last 12 months Western Union. So we are really gaining additional customer segmentation not the retail customer, they want to use the digital one. Putting that aside for a minute, we have been now in 70 countries. Our Middle East strategy, Asia strategy is the same like we did it in Europe for years to open in countries we have been now in 70 countries, sending capabilities to 200 countries. We can drop money in 200 countries on a location, in a location or you can send money to one of the four billion accounts we serve globally. So, this is a huge advantage. In the Middle East, well, I was recently there with the seven countries, they are Gulf countries. They have our outbound countries. They have a big migrant population and these people are also started to have credit cards and accounts which you can allow them to send money from their account, from their credit card directly to 200 countries, not giving cash to a location. We believe it's a huge opportunity. Going forward, it will take some time. We know that the dotcom customers take some time until we acquire them but when once they start to use them, they use it more often than retail. So it's the basic. And you know, if you look at our growth rates, as I mentioned to Ashwin earlier, we have been growing around 20% constant over the years right now. And our base was much smaller on dotcom. Now our base over $0.5 billion revenue and we are still growing by 20%. That's a part of the global expansion and part of it is that returned customers on the existing countries.

Thanks very much.

Okay. Andrew, we will take the final question.

And that question will come from Vasu Govil of KBW. Please go ahead.

Hi. Thanks for taking my question. I guess the first one I had was for Raj. I just wanted a clarification on the EPS guide for the year. I think if you exclude the $0.84 impact that you called out from the divestiture, it seems like the underlying guide is going down $0.0.2. I just wanted to understand what was driving that and if that's the right way to look at it?

Yes. I wouldn't give that too much weight. The only real change is the divestiture impact that's what try to isolate. Otherwise, our outlook for the year really has not changed. When you look at the topline outlook has low single digit constant currency, just same as it was before and margins are still approximately 20%. So the range itself is a little bit tighter and it all depends on the level of revenue, the level of expenses, the t tax rates that we actually will have, timing of repurchases. All those things can have an impact. And so we have just tightened the range a little bit. But we still feel good about the overall outlook and no material changes other than the divestiture related impact that we tried to call out.

Got it. That's very helpful. And then I guess the second question, not to beat a dead horse, but just on the slowdown in the westernunion.com channel. I know you guys called out the slowdown in the domestic money transfer business. But could you just sort of help us with how much it got worse during this quarter? Because just the magnitude of, I guess, decline in transaction would imply that the domestic corridor got materially worse, this quarter versus last.

No, I wouldn't look at it that way. The DMT business transactions did get a little bit worse. However the other parts of the business, the international parts continue to go very strongly and that's where a lot of our expansion focus is. Our U.S. outbound business slowed a little bit but it still had very strong growth. And on the domestic side, I would say the revenues were still relatively stable to the last quarter but transaction were a little bit worse. So we still really feel good about the dotcom business and the growth opportunities and we ultimately want to be in 200 countries and territories over the next few years and with multiple different channels. So nothing has really changed from our strategic outlook on the dotcom business.

Yes. Vasu, I would just add, as Hikmet mentioned, DMT is 8% of our C2C revenues, but within dotcom DMT is actually a higher percentage of those revenues.

Got it. That's helpful. Thank you very much.

Okay. Thanks everyone for joining our call today. You have a good afternoon. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.