Good day, and welcome to the Western Union Company Fourth Quarter and Full Year 2020 Earnings Release Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Brendan Metrano, Vice President of Investor Relations. Please go ahead.

Today’s call, we will discuss the company’s fourth quarter and full year 2020 results, our financial outlook for 2021, 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. On our call today is our CEO, Hikmet Ersek; our CFO, Rajesh Agrawal; and Head of Treasury and Investor Relations, Brad Windbigler. 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 2019 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. We will also discuss certain adjusted metrics. The expenses that have been excluded from adjusted metrics are specific to certain initiatives, but maybe similar to the types of expenses that the company has previously incurred and can reasonably expect 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 distribution of any transcription of this call. I will now turn the call over to our CEO, Hikmet Ersek.

Thank you, Brendan and thank you all for joining us this afternoon to discuss our fourth quarter results and our outlook for 2021. 2020 was an unprecedented year that brought significant changes in the world, as well as within Western Union. We became a more agile, efficient and digital focused organization. Thanks to the successful execution of the global strategy we announced in September of 2019. I am proud of how well Western Union faced the crisis, quickly adapted and created solutions to help our customers provide critical economic support to families and communities around the world. I would like to thank our customers, especially the millions of migrants, many of them frontline heros, for their dedication and generosity that has helped ease economic hardship and support resiliency of people in need. Moving on to an update for our business. We began 2020 with strong momentum from our September 2019 Investor Day, where we unveiled our new strategy designed to advance our position as a leading cross border omni-channel payments platform. While we continue to stay focused on our long-term strategy towards the end of the first quarter, the global pandemic hit and caused a historic drop in global economic activity in the second quarter. This coupled with widespread lockdowns, reduced consumer foot traffic and negatively impacted our retail business. At the same time, there was tremendous demand for digital services broadly that drove significant growth for our digital business. In the third quarter, the uncertainty lessons and economic activity improved and we saw a strong rebound in our C2C business led by better retail trends and continued digital strength. The global economic continued to recover in the fourth quarter and we finished the year with our business and strategic initiatives getting back on track. Our digital business once again…

Thank you, Hikmet, and good afternoon, everyone. My comments today will focus on fourth quarter results along with our financial outlook for 2021, including color on quarterly trends. Information for full year results can be found in our press release and the attached financial schedules. Moving to fourth quarter results, revenue of $1.3 billion declined 3%, compared to the prior year period, while constant currency revenue declined 1%. Currency translation, net of the impact from hedges, reduced fourth quarter revenue by approximately $22 million, compared to the prior year, primarily due to the depreciation of the Argentine peso. In the C2C segment, revenue was flat on both a reported and constant currency basis with transaction growth partially offset by the impact of mix. C2C transactions grew 6% for the quarter, led by 83% transaction growth in digital money transfer, partially offset by transaction declines in retail money transfer. Retail trends held steady in the fourth quarter, despite a recent acceleration of COVID-19 infection and newly introduced U.S. regulation limiting our ability to operate in Cuba for the time being. We believe retail will continue to improve, but the path to recovery may not be linear given the ongoing economic and public policy, effects of the pandemic. Total C2C cross-border principal increased 24% on a reported basis or 23% constant currency, driven by growth in digital money transfer. Principle per transaction or PPT was up 14% or 13% constant currency, led by retail and wu.com. Multiple factors contributed to higher PPT that can be characterized broadly as changes in consumer behavior and business mix. The spread between C2C transaction and revenue growth in the quarter was 6% on both a reported and constant currency basis. Similar to last quarter, excluding the mix impact from the significant ramp-up of our digital white…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Tien-tsin Huang of JP Morgan. Please go ahead.

Hello, everyone. Happy to speak to you all.

Thank you, Tien-tsin.

Hey, guys. My daughter has her piano lesson going on, so forgive the music. Just the guidance was, I thought encouraging. I know you’ve given the long-term outlook of 2% to 3% revenue growth at your Investor Day. But maybe would you mind unpacking your general assumptions on the relative performance between digital and traditional retail, could we see some of those growth trends maybe converge? I’m just directionally curious what you’re anticipating there? And I don’t know if maybe some of these Asian additions like Walmart are also going to contribute in a meaningful way as well? Thanks.

Let me start here, Tien-tsin. Nice to hear your good questions. Obviously, we are very pleased with our performance and the recovery helped the business, especially, also our digital business growth has been exceptional. So we are very pleased on that. And that’s going to continue to happen, right? We do see no reason that’s going to not happen. And especially, with the economic recovery at the latter part of the year, I think that, we are convinced about our guidance and we are really happy how the customers are really sticky to us. And also, it looks like we are gaining really market share. People choosing us Western Union, they trust us. And we are gaining market share. And then, also the digital customer acquisition continue to happen and we know that most 80% of the customers are new. For the new customer, newer to the westernunion.com, so this is also huge and once customers stay with us, they stay longer, they do more transactions. They use us more often. And so generally, I would say that it’s great. I’m also very excited about the Walmart addition. Walmart will definitely give us additional customers and in our retail business. By the way, retail business is also recovering very well. And as lockdowns are getting less worldwide as the vaccines are really spreading, I see really good prospects. So saying that though, you never know, we don’t think that wave three or wave four or wave five won’t happen. We hope all get the vaccine. So it will help to all of us to grow this business and generally also for the industry. Raj, you want to add something?

I can just give you a little bit of color, Tien-tsin on the trends. Retail, we do expect the retail part of the business to grow this year, but it is going to be a volatile Q1. It’s going to follow through the company cap that I laid out and Q1 is going to be the softest, Q2, because we had the lowest Q2 last year will be probably the highest and then much more stable in the third and fourth quarter, but it should get growth for the full-year. And then, digital, the Q2, Q3, and Q4 last year were very high growth for digital. So we’re going to see the grow-over impact of that, so Q1 is likely to be the highest quarter there, and then we’ll get some normalization after that. And then, the B2B business is probably going to have a softer first quarter like the rest of the company and then improve as economic conditions improve the rest of the year. So I don’t see those pieces converging as you had asked, but there’s certainly they are more normalizing versus what they did last year.

Terrific. Thank you, both.

Thanks.

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

Thanks, guys. Good afternoon. I wanted to ask about the spread between C2C revenue growth and transaction growth. I know you were at 6% in Q4. I think that was steady versus Q3, but I thought you would actually expected it to widen a little bit in Q4. So if that was the case, I’m just curious where they may have been a little bit of upside surprise if you will? And then how should we be thinking directionally about that spread in 2021 should it narrow versus that 6 point gap we’re currently observing or do you expect it to stay at similar levels? Thanks.

Sure. Jason, it’s Raj. Yes, the fourth quarter was about the same as in Q3. I would say generally, overall trends are similar. Retail was relatively stable between the two quarters. And then digital, we did start to see some of the grow-over impact of digital both in wu.com from the higher pricing from a year earlier, and then digital white label as we had expected. And then we also got the benefit of some positive mix in other parts of the business and that’s why the spread ended up being similar. As we look at this year, we think there is going to continue to be a spread, but our focus really has shifted Jason to really the top line growth and that’s why we’re really happy that we can give a mid-single-digit constant currency top line outlook and with the margin expansion, because there’s so many moving pieces, it’s a very complex exercise to try to boil it down to just a revenue and transaction spread, because we have a white label business, we have wu.com that’s branded, we have retail, we have the geographies playing a part, so really focused on the top line growth outlook that we’ve given, and that’s really what’s our ultimate objective and then obviously the margin expansion is also a big part of that.

Yes. I just want to add, just in general, Jason. Great question. But in our business model nothing has changed, right? I mean, we are going to continue to invest to get more customers and that’s going to continue. And we are very much focused on revenue growth and profit growth. I call that profitable growth and that’s also, you could see, they also makes here margin expansion to 21.5%. It’s important. So it’s really good results. And I like that, how we acquire customers, how we got the revenue and the profit.

Yes. And the last thing just to add to that one is that we said at, I think on the call, but digital revenues were 20% of consumer revenues last year, and that’s up 600 basis points from the year earlier. And we obviously expanded margins last year and we’re going to do that again this year. So two years in a row of expanding margins, while the digital business continues to track towards $1 billion this year.

All right. Okay, good start. Thank you, guys.

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

Hey, Darrin.

Listen, I want to just tone in on the westernunion.com monthly active customer growth, which I think was 49% again, which compared to around 45% last couple of quarters. So clearly it’s doing well. And I’d be curious to hear, and if you guys can give a little more color on what you think is the driving force in terms of that improvement in active users? What do you actually define as an active user, first of all, would be helpful? And then when we think about what that could mean for your business model, when you have these active digital users that are more engaged. In terms of strategic opportunities, well, even above and beyond what you’re doing now multi-year, more thoughts on that too.

Let me start strategically where we are going Darrin on that. Maybe Raj you can add more color on that later. I think, I call it Western Union’s consumer ecosystem. Westernunion.com is an ideal platform to acquire customers and making them more sticky and we know that the customers, who are using Western Union they’re staying longer, they are stickier and they’ll use us are more open. So that’s a great acquisition opportunity to have a long-term opportunity here. Within the ecosystem, today we are using – the customers are using us for sending money, paying bills, but also as we create this ecosystem and we have about 8.6 million customers at Western Union and these customers are coming from 75 different countries globally. It’s a unique platform to – for multicultural unique platform globally to really add additional services in long-term and could be banking services, financial services, or other services to build that ecosystem. So I’m very excited about that long-term strategy. Your question regarding the numbers, maybe Raj, you can help out here?

Yes. Darrin, how we define it is, these are the uniquely active customers in a month. And so it’s sort of the average for the quarter that we’re giving. So 49% growth there and the great thing as Hikmet said, this is really a sticky business, because these customers are creating an account relationship with us and that’s really where they became a repeat customer, and they do more transactions. And so these are good customers to have. That’s really been the strategy this year is to continue to drive more customer growth, because that will be the lifeblood of wu.com over the next few years.

Okay. And so that active user growth, it’s kind of new metrics should be sustainable in your minds? I know I’m trying just to keep it in the same question. Thanks guys.

Yes. I think the – just like the digital business is going to grow over and it’s going to sort of in the expecting second, third and fourth quarter, it’s going to normalize more. We would probably see the same thing happened on the customer metric, just because of the impact from last year, but the absolute numbers are going to continue to increase this year quite well.

Great. All right. Thanks, guys.

And one other thing, Darrin, also, we do see that westernunion.com also a little bit different customer segment, especially during the pandemic. Let me give you an one example, people currently within the European Union or within Europe or within U.S. even can’t travel, right? They use to use their MasterCard or Visa’s going to applying and using their cards and picking up at the receive country at the ATM the money and distributing within the families. Now they have chosen us, because it’s easier to send and we really target that kind of customers. We do see additional to our existing customer segment, really new customer segment, and our marketing programs and our product program, promotions are really package around that, so that’s an exciting news.

Okay, that makes sense. Thanks, guys.

The next question comes from Rayna Kumar of Evercore. Please go ahead.

Good evening. Thanks for taking my question. So you are making very strong headway with white label partnerships in 2020. Can you talk a little bit about how your 2021 pipeline would work with new partnerships? And then I’ll ask my second question upfront. Really nice to see the dividend increase plus return to share buyback, how aggressive could you potentially be with the buyback at current prices?

Well, let me start on the white label. Rayna, I’ll start with it. Hi, Rayna. How are you? Let me start with the white label. I think that we have really a great success in 2020. We announced in 2019, late 2019 about our white label and started really, is just the beginning of a new era of how we offer our platform to the third-parties. As you know, the banks are currently sending money, bank to bank transactions, account to account transactions, using swift and other correspondent banking. It’s a model, but it’s painful, right? So I mean, the payments industry has a struggle there. So it’s really, some banks are choosing especially when it comes to the exhibit currency are choosing us to replace their existing platform, that’s white label. It’s huge for us. It’s a big opportunity for the future. And we did sign some banks. We’re going to announce also bigger ones when we have them. It takes some time as you know to implement our system in their system, and I’m very optimistic that we’re going to grow this white label partnership also in the future.

And just on the capital return. We are also very happy that we could raise the dividend today by 4% or so. I think it’s a significant use of our cash flow. And in terms of our priorities, we continue to invest in the business to drive organic growth and expansion. Dividend is a significant use of our cash flow. It will be almost $400 million this year. And then we’re also looking for the right kind of acquisition opportunity that fits within the cross-border payment space. And then lastly, we’ll buy back stock. So I would just say, Rayna that to the extent there is not a material type of acquisition. We would expect to buy more stock than we did last year. As you know, we paused the stock buyback for three quarters of the year, but I expect that will be more active this year.

Perfect. Thank you.

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

Good afternoon, and thanks for taking my question. Nice results and hope you all doing well? And thanks for all the detail in your prepared remarks and this presentation, which I’m increasingly enjoying as there’s some good color in there. So the guidance for mid-single-digit revenue growth sounds great. And underneath that, I thought Slide 6 and 8 drove home, how your strategy in digital is working. And I just wanted to ask you to focus on your digital business, can you talk some more about the pieces that we need to consider though this year, this just kind of, on the back of Darrin’s question. I guess on the one hand, you’re looking at some tough comps, because of how many transactions migrating to digital during the period pandemic last year? But then on the other hand, we see your app downloads look really strong, right? So you are still getting the lion’s share of that downloads and that’s been persisting since the pandemic. And wu.com monthly actives are now increased by 49% year-over-year. And so I think those are some data points that speak to the fact that the optimal strength on your digital side? And I think those are some nice leading indicators that you might potentially have a fairly positive outlook for digital this year. So could you just help us understand how we should be thinking about transaction growth and revenue growth in digital through this year 2021? Thanks very much.

Thanks, Jeff. First of all, thank you for the compliments for the presentations. I’ll give that to my team. They used nice PowerPoint presentation, but it’s all about the results. I have to give compliments to my team of their executing especially in digital. Great question. Look, we are very satisfied with our digital. We are going to achieve approximately $1 billion this year. It’s a big number and we are very pleased about that. If you look at our digital business, you have to see it from two parts. One is the Western Union Business, westernunion.com business, which we are kind of an agent, we have direct access to the customers. And the other part is the white label, where we – there are banks or financial institutions or businesses use our platform to move money cross-border for their digital customers, and both are having a big prospect opportunity. On the wu.com business, we are going to continue to invest in the marketing, we’re going to continue to invest on the customer acquisition, consumer acquisition and the stickiness. That’s a business model for the future having that within our ecosystem, building that is a big opportunity. On the white label or digital third-party business, it’s really the expanding, offering our platform to the banks and our salespeople are on the road as we talk and we signed also some banks late 2020 and early 2021. I’m very excited about that. And so that’s going to grow on that part. So I’m – $1 billion revenue target is something nice, which motivates all of us, and it’s a great opportunity.

Yes. I think, Jeff, I should give you a sense with spark. We did say that we expect the digital business to get to be approximately $1 billion in revenue this year. And we ended at just over $850 million last year. So that gives you a sense of the revenue growth. I do expect that transactions are going to be above that level of growth just given the mix of business that we have. And digital white label partners, just to ground you again, last year, it was largely a new business, so that’s why the digital white label showed such extreme growth. So you can’t really look at it as a new business anymore. WU.com is going to be probably more stable year-over-year from a transaction standpoint, also growing over a little bit, but not as much as the digital white label. So I think – just think of it that way, and so the data points we gave you are going to help you get to what we’re thinking about from an overall revenue standpoint at least.

Okay, great. Thanks for all the color and congrats on the results.

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

Thank you very much. And thanks for all the color and detail on both the results and how you’re looking at 2021. Just a quick clarifying question and then I guess my real question. And the first is, on the clarification, you talked about picking up the pace of buybacks in 2021, how much is assumed in your EPS outlook? And then as far as a little more color on what you’re seeing from a behavior standpoint? Any nuance or details you can give us in terms of you attracted a lot of new customers and a lot of customers outside of your traditional demographics, especially during the pandemic. Anything you can share in terms of like how their repeat business or retention has looked like during the course of the rest of 2020. And then what are you seeing in terms of impact from things like stimulus, et cetera, coming on and fading off, et cetera? Just trying to understand a little bit the behavior of a lot of these new customers you added during the course of 2020?

Yes. Let me start and then Hikmet, feel free to jump in wherever makes sense. On the share buyback, last year, I’ll just point you to what we bought in the first quarter. It was about $217 million for the full year, and that was all in the first quarter. The previous year in 2019, we were above the $500 million mark. I would just say that, it’s not going to be as high as $500 million, it’s not going to be as low as $200 million. It’s probably going to be somewhere in the middle of that range. And again, it depends on the other capital priorities, James. But that’s roughly what we’re thinking about. And more than the amount and the timing of repurchase is also going to be important. So that’s what we’re thinking there. And then I think we gave some metrics in terms of what we’re seeing from a retention standpoint, or at least, I think we’re getting 12% more transactions per customer in the dot-com business. We also increased the number of customers by about 30% and then the principal per customer is also, I believe around 25% we said in the quarter in the dot-com business. And then James, I’m sorry, I forgot your last – your third question. It was your third question, I think.

Yes. Just in terms of like what impacts stimulus may be having on different aspects?

Yes. Let me try this one. James, it’s a good question. I think stimulus programs do benefits our business, but it’s hard to quantify. We don’t think they have been significant so far to our business, maybe the U.S. stimulus package was end of Q4. So it may have an impact in Q1 2021. But in general, I would say that the business – recovery of the business really has to do with economical turnaround in different countries. Just a reminder, as you know, most of our business is out of the U.S. and sort of distributed within the countries that – as countries open or close, have a positive impact to our business. But we believe that as the global economy is performing and the lockdowns are getting less and the vaccines are spread Australia, New Zealand is a good example. Japan, Singapore is a great example. I think these are all we can see the first recoveries and as the U.S. – in the U.S. millions of people get vaccines that will also help our business. And then the people are choosing really in the hard times, do choose us. They trust us and they really use us and we believe they are going to continue to do so.

That’s great. Thanks a lot.

Thanks, James.

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

Hi, Ashwin. Ashwin, we can’t hear you? Ashwin, sorry, I can’t hear you? Raj, can you hear Ashwin?

No. No, Ashwin, we’re not able to hear you, you are saying something. So maybe we go to the next question and maybe Ashwin you can come back again.

Just one moment. The next question comes from Bryan Keane of Deutsche Bank. Please go ahead.

Hey, Bryan.

Hey guys, how are you doing?

Good. How are you, Bryan?

Good, good hanging in there. I wanted to talk a little bit about the pricing initiatives in wu.com? It looks like successfully, I’ve seen transaction growth continue to increase. I think it was up at 56%. Can you talk about what kind of pricing initiatives you’ll do in wu.com in 2021? And is there other places where it makes sense to maybe make some changes in price to maybe drive a faster transaction rate even in the retail business? Thanks.

Yes. I think in our pricing philosophy, Bryan, in general we have not changed. What has changed though, we are more efficient on pricing with our dynamic pricing and we get customers more and more on wu.com and we know the customer behavior better. We use the artificial intelligence, we use consumer dynamic pricing that makes us the customers also very sticky. So generally, I would say that our pricing has not changed. We are really focused on customer acquisition, especially in dot-com. But one thing is important, Bryan, I always say that profitable growth, right? I mean, we are focused on the return, we are focused on profitable growth. So it may vary from quarter to quarter, it may really vary on the promotions we do, the dynamic pricing. As you know, there are so many corridors. We are active in so many countries with so many currencies, and that’s what we really did different brands, we do that. In the past, we were doing more dynamic pricing on a quarterly basis, we changed that especially in dot-com, we start to do dynamic pricing based on the consumer relationship – customer relationship that makes the customer more stickier and our upgrades on our systems, upgrades on our platform has helped a lot of that. We also have our own department of data management and that’s helps a lot, Khalid and Jay, who runs this dot-com business is doing a great job. So on that Raj, do you want to add something?

Yes, just a couple of words. I’d say, Bryan, that we were quite active last year in driving for the customer acquisition, and maybe we have a little bit more to do this year. But a lot of what you’ll see in the numbers will be more for the carryover impact of the pricing strategy from last year. If you actually look at the yield, just comparing the yield between Q3 and Q4 for dot-com, they were quite similar. In fact, our entire businesses are quite similar. So not a big change from quarter-to-quarter, year-over-year, you can see it more, but from quarter-to-quarter, not much of a change. And I think you’ll see more of that stability probably this year in terms of yields. A little bit more to do, but a lot of it was last year.

Yes. You can really see the solid growth in digital. So congrats on that. Thanks.

Thanks, Bryan.

The next question comes from Andrew Jeffrey of Truist Securities. Please go ahead.

Hi. I appreciate you taking the question. Lots of good information back and forth here. My question is really high level, and I’m just trying to wrap my head around this dynamic. And maybe it’s a simple answer. I’m looking at Slide 11 with C2C transactions up 6% the last couple of quarters and cross-border principal up north of 20%. And I’m also thinking about a competitor’s results this morning where revenue grew significantly faster than transactions. And I’m just trying to think about what has to happen at the margin, given the really good volume growth for revenue growth to accelerate. I know you said, retail is going to be up Raj this year, and maybe that’s part of the answer. But I mean, is it mix, is it price, is there something else, I’m just trying to distill it down to its most basic components?

I do think you’re going to start to see the benefits of some of our groundwork we’ve been laying over the last year or so. Last year, Andrew, we had so many customers looking for ways of sending money and we wanted to really back up the truck and take those customers in, and engage them in our digital business. And that’s really going to start to show up here. We’re going to get a lot of revenue grills from digital. Our retail business is going to rebound, so that’s going to be a piece of it. And we’re – and that’s why we were able to give the outlook. I would just say, that we not only did we grow our digital business a lot last year, but we also do margin. So this year we’re really happy that we can actually drive revenue growth, which is ultimately our goal. And that’s in the mid single digit range. We’re also going to drive margins, we’re taking the digital business up to about $1 billion inside. So I do think that you’re going to start to see more traction from a revenue standpoint now that we’ve sort of laid the groundwork from last year.

Yes. I will just add those Andrew on that. You mentioned competitor, but if you look at our base $860 million in debt and $50 million this year and growing to $1 billion, it’s a good achievement I believe. It’s really very strong growth from this base. And we want to really achieve approximately $1 billion revenue this year. And that’s also – the downloads of apps has been huge on the Western Union apps, on the mobile apps. It’s 2 times bigger than the next competitor. And as you know – so we are pleased with the growth rates and we are really targeting the $1 billion. Hopefully we can celebrate as early as possible.

Thank you. I appreciate it.

The next question comes from Timothy Chiodo of Crédit Suisse. Please go ahead.

Great. Thanks a lot for taking my question. I just want to dig into the margin guidance a little bit. So operating margins this year came in at about 20.8%, guided to 21.5% next year, so about 70 basis points of margin expansion. Maybe you could just break down some of the components. I know there’s more cost saves on the come, but perhaps there’s some more investment behind CAC and digital. Maybe some of the – maybe temporary cost savings from this year might come into the model. Maybe just break down the components to bridge us or the walk to the 70 basis points of expansion.

Yes, sure. Nice to speak with you, Tim. Revenue growth is a key driver of the margin expansion. So that really gives us the big start here. And you’re right, we are targeting about $100 million of total savings this year and that’s including more than $50 million or so that we got last year. So there’s an incremental amount that will help us on the margin side. We’re also investing in the business. So a lot of it – some of it is just catch up spending from last year, but we are investing in our technology platforms. We’re going to have a new settlement system this year. We’re moving applications to the cloud. We’re upgrading our dynamic pricing capabilities. We’re also going to spend a little bit more on the marketing side. So all of these things combined sort of give us this additional 70 basis points of expansion, and we’re really happy to get now two years in a row of margin expansion. We haven’t had that for awhile. Last year, that was even in the face of a down revenue environment. This year, not only is the revenue going up, but we’re also driving margin expansion. And I really do believe that – and the other thing is that we’re going to get an additional $50 million of savings next year. So that’s part of our original roadmap getting us to the $150 million of run rate savings. So there’s more margin potential in the business, and we’re really getting back on the right track with this year’s outlook.

And returning significant cash back to shareholders – besides performing well in our business and giving a guidance, returning of cash back to the shareholders by increasing the dividend and share purchases.

Excellent. Thank you for that context. That’s all very, very helpful. The minor, minor follow-up is, and I apologize if you mentioned this and I missed it. But did you quantify any of the Cuba impacts at all either for the quarter or for the guide? I’m sure it’s small, but it’s like you mentioned?

Yes, Cuba. We obviously, working to see what we can do to relaunch it. But yes, right now it’s closed. It’s about 1% of our revenues Cuba is typically, so that’s – so it’s not the biggest impact, but it is about 1% of our revenues.

Okay. I think you were about to anticipate my question, go ahead.

Yes. We’ve anticipated some of that in our outlook. So, we already knew that it sort of shut down in mid-November or late-November.

Perfect. Thank you so much for taking the questions.

And the last question will be from Bob Napoli of William Blair. Please go ahead.

Thank you for getting me in there. Appreciate it. Good afternoon, everybody. How are you?

Hey, Bob. How are you?

Great. Question on – maybe just digging in again to the digital business and kind of the long-term outlook. And I understanding it’s, getting close to $1 billion in revenue. But as you look out over the next three to five years, I realize your active customers are up 49% with revenue guided up 20%. And I think that’s – I assume that’s the white label. But what is the right growth rate? And is this accretive to margins over the long-term and what’s the right growth for this business over the next three to five years? Where are the biggest opportunities geographically? What’s going to sustain the growth of that business?

2020 was definitely an exceptional year. We had a very strong year. But only the beginning of the real growth year of the digital, I really believe that our future is the digital transaction that’s going to happen. And that’s going to continue to grow. Is it via westernunion.com or via digital third parties? I’m really excited about that. And I think that especially also having customers acquisition in our system, in our westernunion.com consumer acquisition, we are only a lot 8.6 million customers already yet. And that’s opens up a huge opportunity to expand our customer acquisition globally. And that’s something that I’m excited about that you could do more activities besides money transfer with 8.6 million customers. You can really have them stickier. You can offer additional products and with westerunion.com. Look, example like Sberbank, Sberbank is a great partner and they really – I say that, okay, we have – we would like to choose you to send money to all the cents countries. Can you drop the money for us? And can you do the settlement? Can you do the payouts? Can do the network activities? Can you do the settlement activities, compliance activities for us? And that’s what we are doing. And we are doing in an efficient way that white label partners are choosing us, stc pay is another example, Saudi Arabia Telecom pay. We even found the opportunity to invest there. And we believe that when they expand their activities in the Gulf States and other countries that gives us also additional transaction and capabilities and also customer acquisition. So I am excited about that. And Raj, do you want to add something?

Just on the margin question. We had Bob, as we said in the last quarter it’s absolutely margin accretive. A lot of digital business is incremental to us, first of all. And then it has a very high margin profile regardless of whether it’s wu.com or digital white label. And as you’ve seen, and I think I said it earlier, but the digital business are growing now. This year, it’ll be about $1 billion and we’ve continued to expand margins over this period. So I think that really is case in point about the profit profile of the digital business.

Thank you. And Raj, I thought I heard that you or Hikmet just to clear – I mean, did you say as far as capital return that you’re focused on looking for an acquisition in cross-border payments. And if so – if I heard that, right, I wonder if you could give any more color on that that’s you are looking for.

Yes. I was trying to make a generic comment that that’s a top priority for us. So in terms of our capital priorities, it’s really investing in the business. Then we use about almost $400 million for the dividend return. The next thing that we’re always looking at is the right kind of acquisition opportunity in cross-border payments states. And then we return our excess cash through stock buybacks. So that’s the order that we think through cash usage, but we’re always looking for the right kind of acquisition, either capability or technology of some sort to advance us a couple of years from what we’re doing on our road map.

Thank you. Appreciate it.

This concludes our question-and-answer session. I would like to turn the conference back over to Brendan Metrano for any closing remarks.

Yes. Thank you, Andrew. And thank you all for dialing in to the call today. And we appreciate your interest in the Western Union Company.

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