WU - NYSE

Good day, and welcome to the Western Union Fourth Quarter and Full Year 2024 Results Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Tom Hadley, Vice President of Investor Relations. Tom, please go ahead.

Thank you. On today's call, we will discuss the Company's fourth quarter and full year 2024 results, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Joining me on the call today is our CEO, Devin McGranahan, and our CFO, Matt Cagwin. Today's call is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2023 Form 10-K for additional information concerning factors that could cause actual results to differ materially from the forward-looking statements. During the call, we will discuss some items that do not conform to generally accepted accounting principles. We have reconciled those items to the most comparable GAAP measures in our earnings release. attached to our Form 8-K as well as on our website, westernunion.com, under the Investor Relations section. I will now turn the call over to our Chief Executive Officer, Devin McGranahan.

Good afternoon, and welcome to Western Union's fourth quarter 2024 financial results conference call. We continue to focus every day on becoming the market leader in providing accessible financial services to the aspiring populations of the world. Our customers are inspiration, as we improve our products and services and position ourselves as their trusted partner. We are privileged to have over 100 million customers around the world, a base that has stabilized over the last several years. Since October of 2022, our team has been hard at work executing our Evolve 25 strategy to improve our value proposition, expand our product offerings and most importantly, ensure high-quality execution. Today, we reported another quarter of improving adjusted revenue growth as we continue to implement our Evolve 2025 strategy, which is focused on returning Western Union to sustainable, profitable revenue growth. Over the last two years, we have driven meaningful improvements in our business and this quarter's results continue to demonstrate that our efforts are working. These results give us confidence that we are well on our way to achieving our previously stated financial objectives as we continue to report solid transaction trends and improving adjusted revenue growth ex-Iraq. For the fourth quarter, our revenue reached $1.060 billion. Excluding Iraq, our adjusted revenue growth was a positive 1.4%. Now the third consecutive quarter of positive adjusted revenue growth. Consumer Services led the way with another strong quarter at 23% adjusted revenue growth, driven by our Media Network business, the expansion of our foreign exchange services and continued growth in retail money order. Our strategy of growing beyond CMT continues to show promise and momentum. In addition, our branded digital business continued to perform well with 13% transaction growth and 8% adjusted revenue growth in the quarter. Adjusted earnings per share came in strong at $0.40 or up $0.03 relative to this quarter a year ago. The improving performance of our core business is readily apparent as in Q4 2023 benefited meaningfully from higher revenues and operating profits from Iraq which were not repeated in the current quarter. Matt will discuss our financial results in more detail and provide our 2025 outlook later. I have recently returned from nearly two weeks in Asia, visiting with our local teams, aligning on plans for 2025. This region is a microcosm of our larger company-wide efforts. In 2022, the region shrank transactions 12% and adjusted revenue 9%. In 2024, that improved 8% transaction growth with adjusted revenue down only 3%. The turnaround in Asia is one example of why we remain confident of the trajectory we are on. Throughout the visit, I saw progress on our strategic agenda and still plenty of opportunity to continue to accelerate our performance. The region has embraced our new approach to both digital and retail. On the retail distribution side, we are moving away from heavy dependence on postal systems and master agents to a much more dynamic system with owned locations at the top of the pyramid, branded exclusive concept agents and strategics in the middle and a broad base of independence at the bottom. For example, Singapore now has our highest performing owned location network with 7% revenue growth and 10% transaction growth in 2024 and includes one of the single highest volume locations in the Company. While I was there, I went to the opening of our first owned location in Malaysia. This trip reinforced my belief that around -- my belief around the value of having a small network of owned locations. We believe there is significant opportunity in Malaysia to go after high-volume retail corridors where we can win with an owned location strategy. Australia and New

Thank you, Devin, and good afternoon, everyone. I'm pleased to be here today to walk you through our 2024 fourth quarter and full year results as well as our 2025 financial outlook. For the full year, we delivered GAAP revenue of $4.2 billion. Our results landed us comfortably above the midpoint of our improved 2024 adjusted revenue outlook. Adjusted revenue growth, excluding Iraq, was positive 50 basis points in 2024, which is about six months ahead of where we anticipated we'd be at our Investor Day in October 2022. These results were driven by 15% growth in Consumer Services and improving trends in our CMD business, supported by 8% branded digital revenue growth. In the fourth quarter, GAAP revenue was $1.1 billion. For the third consecutive quarter, adjusted revenue grew ex-Iraq and was positive 1.4%. Adjusted operating margins in the quarter were 17% compared to 16% in the prior year, with the improvement primarily due to efficiencies in our marketing and technology areas. In 2024, our full year adjusted operating margin was 19% compared to 20% in the prior year, with the decline primarily due to lower revenue from Iraq, offset by efficiencies in our core cost base. Fourth quarter adjusted EPS was $0.40 compared to $0.37 last year, benefiting from higher adjusted operating profit, lower share count and lower adjusted tax rate. For the full year, we delivered adjusted EPS of $1.74, which benefited from lower share count and lower adjusted tax rate which landed us comfortably in our improved guidance range of $1.70 to $1.80. In the fourth quarter, we reported a significant noncash tax benefit exceeding $250 million stemming from the reorganization of our international operations to realign and consolidate our international hub. This positively impacted our GAAP EPS by $0.75 but was excluded from adjusted EPS. The adjusted tax rate for the quarter was 12% compared to 14% last year, whereas our full year adjusted tax rate was 13% compared to 15% the prior year. Our adjusted tax rate was lower this year due to the mix of income and a few minor discrete tax items. Now turning to our CMT business. In the fourth quarter, CMT adjusted revenue, excluding Iraq, was flat year-over-year, while CMT transactions, excluding Iraq grew 3%. For the full year, CMT adjusted revenue, excluding Iraq, was down 1%, while transactions, including Iraq grew 4%. These results were driven by improvements in branded digital in digital white label in a consistent retail business. We have made significant strides in our customer agent experience and our overall value proposition over the past two years, which has contributed to our ability to improve overall customer retention by almost 40 basis points in 2024. Now turning to our branded digital business. In the fourth quarter, we grew adjusted revenue by 8% with a 13% increase in transactions. This marks the seventh consecutive quarter of double-digit transaction growth. Account payout transactions that originated digitally continued their strong momentum, growing 30% in the quarter. For the full year, adjusted revenue growth improved 800 basis points compared to 2023, while average new cost border monthly active customers grew high single digit in 2024. Now turning to our retail business. In the quarter, we saw improvements in both Europe and MEASA, excluding Iraq, partially offset by North America and Latin America. Europe's momentum resulted in 9% transaction growth as they benefited from stronger distribution, expanded debit acceptance and lapping an agent loss. Now transitioning to our Consumer Services segment, which accounted for 11% of our total quarterly revenue. Fourth quarter adjusted revenue rose 23%, driven by growth in Media Network, retail foreign exchange and retail money order. I'm pleased to report that in 2024, we achieved our goal of double-digit revenue growth in Consumer Services with a 15% increase in adjusted revenue. This marks our third consecutive year of double-digit growth in Consumer Services. And we continue to target 10%-plus adjusted revenue growth rate in Consumer Services as we continue to introduce and expand offerings to the aspiring populations globally. In the fourth quarter, Consumer Services operating margin was 11%, a 200-basis point improvement over the third quarter. As these products scale, we continue to expect that our margins will improve and be at or above our total company margin. Now shifting to our -- from our top line to our expense base. As part of our ongoing commitment to disciplined cost management. I'm pleased to provide an update on our five-year $150 million expense redeployment program. In 2024, we continue to make significant strides in optimizing our cost base, and reallocating resources to drive efficiency and growth, achieving total savings of $60 million. This is in addition to the $50 million that we freed up in 2023. To illustrate, in our global operations function, which includes areas like customer experience and support, real estate, key compliance processes and agent care we have reduced our cost base by nearly 20% between 2021 and 2024. Within the overall $100 million of savings that we have achieved to date, nearly $30 million was related to the efficiencies that we have made in customer experience and support. We continue to see further opportunities throughout our business to continue to optimize our cost base. Looking ahead, we expect to complete our five-year commitment two years ahead of schedule, achieving our target of $150 million this year. This accelerated time line underscores our ability to leverage scale, drive continuous improvement and maintain financial flexibility. Now turning to our cash flow and balance sheet. In 2024, we generated $406 million of operating cash flow, which was negatively impacted by higher taxes paid, including $160 million related to the deferred tax payments under the Tax Act and $70 million related to the IRS settlement earlier this year. As a reminder, we will make our final deferred tax payment related to the Tax Act of $220 million in the second quarter of this year. In 2024, capital expenditures were $131 million or roughly 3% of total company revenues. We remain committed to strategically investing in key areas in aligning our agent compensation to performance. Over the past three years, we've averaged roughly 100% adjusted free cash flow conversion. We define adjusted free cash flow conversion is free cash flow, less unusual tax items divided by adjusted net income. I'm pleased to report that in 2024, we have returned almost $500 million to our shareholders with $318 million paid in dividends and $177 million used to repurchase shares. I'm also pleased to announce the Board of Directors recently approved a $1 billion share repurchase authorization, which will allow us to continue our historical practice of strong cash returns to our shareholders through our dividend, which is yielding 9% and our strong share repurchase program. We also continue to maintain a strong balance sheet with cash and cash equivalents of $1.5 billion and debt of $2.9 million. Our leverage ratios were 2.9x and 1.5x on a gross and net basis, which we believe provides us ample flexibility for capital return, or potential M&A while maintaining our investment-grade credit rating. These levels may appear to be higher than what you're used to. As you may remember, we announced in the second quarter last year that we entered into an $800 million delayed draw term loan facility, which we used to refinance our bond that matured in January of this year. As a result, our cash and our debt balance were elevated at year-end, which affected our gross leverage ratio. Now moving on to 2025 outlook which assumes no material changes in macroeconomic conditions relative to last year. However, some uncertainty exists in the United States as we are two weeks into the new administration. We forecast adjusted revenue to be in the range of $4.115 billion to $4.215 billion. This range reflects continued growth in our branded digital business, and 10% to 15% growth in Consumer Services as we continue to -- as well as we continue to stabilize our retail business. The midpoint of this range is 1% adjusted revenue growth, excluding Iraq, which puts us on track to achieve our Investor Day target of flat to 2% revenue growth. We forecast that our adjusted operating margins to be in the range of 19% to 21%. And lastly, we forecast adjusted EPS to be in the range of $1.75 to $1.85. From a quarterly phasing perspective, please keep in mind that Iraq contributed $65 million in the first quarter of 2024 and $34 million in the second quarter of last year before normalizing the latter half of the year. We do not anticipate that Iraq will return to the elevated levels experienced in the first half of last year, which will result in a headwind in the first and second quarter this year. Additionally, please keep in mind that the first quarter of last year, was impacted by leap year, which benefited us in the first quarter of last year. To conclude, we are 2/3 of the way through our Evolve 2025 transformation, and we are confident that we have laid the foundation needed to drive long-term, profitable and sustainable revenue growth. As we embark on this pivotal year, we remain committed to driving growth, innovation and value to our shareholders. Thank you for joining the call. Operator, we're now ready to take questions.

[Operator Instructions]. Our first question comes to us from Tien-Tsin Huang from JPMorgan. Please ask your question.

Thank you for going through all the details here. Just thinking about the outlook on the revenue side and the range what might cause you to be at the low end versus the high end? Is it worth maybe going through some basic assumptions there that might influence the outcome?

Tien-Tsin, thanks for joining the call today. The variability between the high end and the low end of the range. There's a lot of uncertainty in the market. Things don't move lumpy. We are super proud and excited about where we've come from. If you look back two years ago, the Company was declining mid-single digits. We were able to exit last year with 50 bps growth full year and 1.4% full year. So super excited about what we accomplished. The assumptions that are underlying that is continued consistent macroeconomic conditions we experienced last year. So, no major changes in currency or inflation. We have in our core businesses, we expect to have high single-digit, low double-digit branded digital growth. prepared remarks, we expect to have 10% to 15% growth in consumer services. What could move us to the upper end of the range further stability in the retail market, acceleration of branded digital this year, higher consumer service we had later in the year. So, there are many things that could put us at the upper end or even above, but it's obviously an uncertain market where we are, as we highlighted in the prepared remarks.

Yes, that's fair. And then just on the Consumer Services, you mentioned it -- sorry....

Go ahead, please.

Yes. I was just going to have a quick follow-up. Just on the Consumer Services side. You called it out there, 10% to 15%, you're running in the lower 20s exiting the year. Your mid-teens for '24. What's driving the deceleration? How much of that is conservatism or were there some one-timers that maybe lifted the consumer services? It sounds like some of initiatives could actually drive acceleration. So just trying to reconcile all that.

Yes. Tien-Tsin, that's a great question. I mean you've known me now for three years. So, it could move around a lot of different places you've called me conservative for. But there are things in there that we had some strong Q4 on Media Network. Usually, media is very strong in the latter part of the year, as you know, from other businesses. That may not continue for all of next year. We have launched a couple of business that we start to cycle through as we go forward but we do have line of sight to get us to our commitment of 10% to 15%.

Our next question comes to us from Darrin Peller from Wolfe Research. Please ask your question.

Just want to ask about the digital aspiration to drive double-digit growth on revenues. Obviously, the spread continues to be in that 6, 7 percentage point range and you're continuing to show great results on double-digit growth on transactions, but help us understand the driving factors to allow for double-digit revenue growth here in the digital transaction side in the digital business? Then maybe just remind us, what is your timing expectation on that?

Yes, Darrin, great question. Thank you. And it's something we continue to spend a lot of time talking about I think it's important just to reflect on the progress we've made. two years ago, our digital business was shrinking revenue 1%, now it's growing revenue in the high single digits. That has been the function of driving our customer acquisition and our transactions in the double-digit range. We expect to be able to continue to do that as we've now done for seven quarters in a row. So, this becomes an exercise of managing what is in the base. And as you know, some of the factors that we've talked about is the increasing growth or the relative speed of growth to pay out to account which has a different revenue per transaction profile than our historic payout to cash. And our continued attrition of the legacy book, which has a different pricing profile than all of the customers that we've acquired in the last two years as we've become market competitive on new and repeat transactions. So as that book continues to shift and manage. We continue to expect, and we've talked about a 300 to 400 basis point gap between transactions and revenue. As we've talked about in the past, if we accelerate transactions that range might increase, but we would be okay with that. But as we continue, we believe it will stabilize over the course of the next 18 to 24 months.

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

I was wondering if you can maybe touch on some of the dynamics that led to the modest decel in the North American revenues. If you could just kind of go through what you're seeing there? And I guess, specifically, you called out a few macro impact that you were seeing last quarter. I think one of them would have related to North America, like the U.S. to Mexico quarter. The other one a bit in LACA. So, it would be helpful to get an update on that as well.

Will, I hope you're doing well. Let us remember that we are, in fact, a global business and highly diversified only 30% of our revenue comes from the U.S. We did see, as we talked about in the third quarter, some sluggishness in North America but, I remind we had 1.4% ex-Iraq adjusted revenue growth in the quarter, which is the second-best quarter the Company has had on adjusted revenue basis in the last 20 quarters. So even with the slowness in North America, we continue to propel our business according to our strategy around the world. We are still seeing the effects of the macro events down below the border and the elections that we talked about in the third quarter as the migratory patterns of people shift, and we're obviously seeing some effect of the election in November as we normalize to a different environment here in the U.S. for migrants.

Got it. That's very helpful. And then just maybe a separate follow-up. I know one of the bigger drivers of that, the positive revenue growth this quarter was the consumer revenue. I was wondering if you could hit on the margins in that segment and just how you think about sales margins over time? And maybe what level of revenue you in order to kind of achieve your improving target margins in that segment?

Will, thanks for the question. As we talked about in the prepared remarks today, we did progress by about 200 basis points from Q3 to Q4. We expect each product that we've launched, whether that be the media network, the prepaid business, the wallets and you keep going through them. We believe each one of those has company-wide margins are better once they're fully at scale. As we've talked about in prior quarters, each one of them will roll out at different pace. We launched the prepaid business a little over a year ago now in the U.S. We're now starting to launch in other parts of the market. Each one of those will have a ramping process. Media network is largely in the U.S. So, we think you're going to continue to make progress towards our company average, but it will happen over the next couple of years, we roll out products.

Just talk philosophically for a second. If I could grow the whole company 23% at 11%, I might take that trade. So, we're pleased with the fact that we've launched businesses. We're seeing an adoption by customers an acceleration of a revenue growth profile that looks significantly different than our historic norms. So, we will continue to invest in these businesses. And as we see market opportunities continue to grow them. I am not in the business of trying to slow the growth to improve the margin in that particular segment?

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

Thanks so much for taking my question today. Branded digital transactions decelerated a bit versus last quarter, although still, as you mentioned, solidly in double-digit territory. But the spread to branded digital revenue actually tightened a little bit by 100 basis points to about, I think, about 5%. Can you give us your thought on spread dynamics in '25 and what we should expect through the year in terms of your, I think, longer-term goal to sort of tighten that up?

Ramsey, thanks for joining the call today. You heard our tone earlier, we're super excited. We've come a long way over the last two years. We were plus 1% in 2022. This year, we were able to grow trans 13 and took revenue from basically being flattish to high single digit this year. So huge progress. We still tie a lot more room to go. As we talked about our Investor Day two years ago. We think this business is a mid-teens overall business, and we still got some more progress to get there. As far as the pace of closing the gap between transaction revenue, we're going to manage the overall business to drive top line growth, adding more customers, and we're very focused on growing the overall business. The output is delivering revenue growth and EPS. We do think it will narrow over time as we lap the pricing and we have more of the legacy clients that are a little bit higher rates than market traded away and we add new. But you also have a little bit of pressure coming from -- as I talked about in my prepared remarks, our account payout business is growing 30%. That's both on the retail side as Devin highlighted, and I highlighted on my prepared remarks, that comes at a lower RPT, but it's very profitable. It doesn't come with a commission. So, we're very happy to have it.

And a quick follow-up. Just on M&A. You made some smaller acquisitions DASH, and I think the Mexico digital wallet recently, maybe update us on your asset M&A, given all the changes in the environment. And also, these deals reflect small because was there any inorganic contribution in the quarter that's material to call out.

To clarify, neither deal has officially closed yet. We are waiting for regulatory approval in both Singapore and Mexico, so there would be no contribution to the quarter from either transaction. We remain an interested buyer of properties that fit particularly well with our strategy. And as I have talked about, allow us to accelerate that strategy in a cost-effective way with strong returns on our capital deployment. So, the addition of DASH was an acquisition that, as I highlighted in my comments on APAC allows us to accelerate our digital wallet capabilities in that region and strengthens what's already a pretty good franchise for us in Singapore acquired cost effectively, and we believe will be additive to both the strategy and the Company once it closes in the latter half of 2025. As we look around the world, when we see other things like that, I would anticipate that we'll be prepared to act.

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

I wanted to ask about the retail transaction growth trend. Obviously, it's an improving trajectory here. I'm just wondering what you think could be drivers of further improvement? Is it just broader rollout of the new point of sale or some other dynamics?

Most of the incremental improvement will continue from the strategies that we've already launched, which is optimizing our distribution network, continuing to grow our independent agent footprint improving the level of service and customer experience, which includes the point-of-sale rollouts and strategically managing our go-to-market against specific corridors and customer segments. The biggest opportunity, as you can tell, is probably now in North America relative to the performance that we're getting in most of the rest of the world's retail networks. We continue to wait for the market to stabilize a bit in LACA but that has been and was last year a mid-single-digit grower. So, we believe that will continue as we settle through some of these transitory postelection issues. So, I would look forward to LACA returning to mid-single digits and us continuing to execute the strategy in North America, which will propel the overall retail business into that stable to slightly positive zone that we believe it can be.

Okay. And then just coming back to your comments earlier that you've seen a little bit of impact on migration patterns postelection thinking about Mexico, is there any headwind for that kind of factored into your guidance? And maybe can we just get an update on what percent of your total C2C revenue is coming from the U.S. Mexico corridor?

So as far as our guidance, we've got obviously a 0, 2% range of revenue growth. It depends on how severe something is to be impacted, whether it's included or not, but we think it's a pretty wide range, provides us some flexibility. As far as how big is the U.S. to LACA business, it represents -- all of North America represents around 30% of our business. U.S. to LACA mid-20s.

Low-to-mid 20s.

Our next question comes to us from Vasu Govil from KBW. Please ask your question.

I wanted to follow up on that question about migration patterns. Just Matt and Devon just -- can you help us think at a high level if some of the initiatives that the new administration is taking were to continue to accelerate in terms of deportation and such, how to think about the potential impact on your business? And then I have a follow-up.

So, I think -- and we've seen it over the course of the two weeks, what's going to happen is you'll probably see some decline in transactions and an increase in principal per transaction. So, frequency will go down and principal will go up. But also, I think you have to put into context, this is largely a retail phenomenon. And it's largely on what I would call recent arrivals in the United States. And so, if you look at our business in 2024, new two franchise new to retail customers sending to the LACA region. So that's more than just Mexico was only about 2.5% of our total revenue. So that's the risk right there is that number slows a bit. And last year, it was kind of growing in the negative single -- high single-digit rate. So, it wasn't a strong performer for us anyways all of last year, which you can see in some of the softness for the numbers in North America. So, is there some risk? Without a doubt. Do we need to keep a close eye on this administration and the changes and perspectives? But the vast majority of our business are customers that have been here for a while, who have good paying jobs who send money home to love ones on a regular basis, and we anticipate that, that will continue.

That's very helpful, color. And I guess my second question was on crypto, which seems to be having a resurgence. Any updated thoughts on your view and how you see that impacting your business long term.

So, I've said this publicly a number of times. We pride ourselves in being one of the best in terms of managing our risk compliance and protecting our customers from fraud and protecting the integrity of the international financial payment system. If there is an opportunity in which you can do that legally and with high protections for customers and financial integrity with crypto, we will certainly explore that. And in fact, we would welcome an opportunity and there are places in the world where we are exploring this, where we could actually settle funds via crypto and enable us to reduce both the float that we have in the system, as Matt usually talks about any given day, we have $1 billion-plus floating around to enable our business to reduce the float in the system, which will certainly help our balance sheet, but also to speed up some of the inefficiencies of using the traditional SWIFT-based banking system to move money and settle transactions. So, we look forward to the innovation, but we only look forward to the innovation in a manner that would be consistent with our perspective of being and continuing to be a highly regulated and high integrity financial institution.

Our next question comes to us from Rufus Hone from BMO. Please ask your question.

I wanted to ask about the retail business, ex-Iraq. And if I'm doing the math correctly, it looks like this quarter that was down about 3% year-over-year, a slight improvement from last quarter. I'm just curious to get your view about how you think that will trend through 2025.

Rufus, Thanks for joining the call. As we talked about earlier and Devin shared during his prepared remarks, we're super excited about the progress we've made in our retail business. We've taken it from being down two years ago, high single digit to -- got to the point now where transactions were down more low single digit. We think with the items that Devin talked about a minute ago for one of the questions, two or three people back, we think we can continue to make progress there, whether that be through continue to roll out our new point of sale, improving our customer service, agent service, continuing to improve our value proposition. We think we can continue to make progress on that.

Rufus you'll recall, two quarters ago, we were getting the retail business closer to negative 1%. And the slowdown that we've seen in the Americas has obviously caused the third quarter now. We're calling some of that back in the fourth quarter, which you appropriately note. So, there's going to be some volatility in that. It's a large-scale business. But the trajectory, which is upward and to the right mean two years ago, our retail transactions were down 7%. This year, they were only down 2%. So, we've seen a 500-basis point improvement, and we see strength in many regions around the world including the Middle East, Iraq, including the comments I made about LACA or made about APAC and obviously, the strength you can see in the numbers in the quarter from Europe.

Our next question comes to us from Chris

Thank you for taking our questions. Chris for Tim Chiodo from UBS. Wanted to hear your thoughts about your investment needs longer term. And I wonder if you could rank-order the areas of your investment priorities beyond this year? And related to that, you've been tracking half your five-year expense redeployment plan. So, I guess could you talk about how you're planning on funding potential incremental feature investments once the rate deployment program is completed?

Chris, thanks for joining the call today. Tell Tim hello for us. We feel very good about our ability to make investments has not been any of our challenges here about the level of capacity. We feel like there's still plenty of room left in redeploying costs within our business. We highlighted the current program we have, which is the $150 million five-year which were $110 million through. We got our Investor Day coming up in November, and we'll talk about something there as well. But we feel like there's tons of opportunity. We think we have enough capacity on our balance sheet if we had any strategic M&A that makes sense to tuck in and help us accelerate our path. We think we've got -- we believe we have enough space within our technology budget to invest in new products and technology builds. So really, our focus is going to be to continue to build out consumer services to address the needs that our 100 million-plus customers we have around the world would want to expand our TAM and help them have better financial lives. And that's really our path the next three to five years. But Devin, would you add?

Yes, I'd add two things, right. And think Matt highlighted in his commentary, the success, and I'll just use the operations area as an example, and reducing operating costs by 20% over the three-year period. We continue to see plenty of opportunities within the Company, within the existing cost base to have year-over-year performance improvements, which can both drive the bottom line but also provide money to invest in our growth initiatives. So even though we're completing the $150 million, I don't think that's an end to the opportunities that we see. And certainly, I commented on from 2022 when I arrived. The second is Matt also highlighted that we are going to finish the last of the Tax Act, deferred tax payments in April of $220 million. And for most of my tenure as CEO that has been a burden on our cash flow conversion and cash flow capital return opportunities, and so getting that behind us actually changes the dynamics of our capital creation potential and thus allows us the opportunity to both return more capital to our shareholders and/or invest in inorganic opportunities to drive the business.

Our next question comes to us from Chris Kennedy from William Blair. Please ask your question.

You've talked about the strength of the digital business in Australia. Can you unpack that a little bit? What's the dynamic in that market? And is that -- can you kind of replicate that success in other markets?

Yes. So, I just came from Australia. And it's a super interesting and super competitive marketplace. Our competitors are spending an enormous amount on advertising, it's on bus stops, it's on television. And it's even some of our competitors who historically not relied on advertising to drive their growth. So, it's a fascinating dynamic. Our growth is driven by the quality of the product and the brand that we have in the marketplace. We have a strong business throughout APAC because of our long history of being a payout partner in many of these regions and much of the growth from Australia is into other APAC countries. So, it's Australia to India, Australia, the Philippines, Australia to China, Australia to Indonesia. And so, the strength of our brand across both send and receive markets, the quality of the product, if you'll remember, we launched our next-generation digital product in Australia first. So, we've been there the longest. And so we have very high conversion rates for new customers to become customers. And then, we have high repeat transaction and product usage, given the quality of the experience that they have. We believe it's completely repeatable. And as you heard in my prepared comments, we're looking to accelerate the rollout of that next-generation digital platform in 2025 to up to 10 more countries to help accelerate our global business.

We have time for one more question, and that question will come from Andrew Schmidt from Citi. Please ask your question.

I wanted to dig into the building blocks of -- for digital growth for 2025. When I think about it, there's user growth, transaction frequency, pricing and mix. As you think about 2025, are there differences in terms of just the buildup of the building blocks, digital growth versus '24? Or is it more of the same?

So, I would add one dimension to your -- those are the right underlying dimensions. For us, there's also geography. So, we have a digital business in, I think, 50-some countries around the world. As we've gone on our transformation, and you can remember all the way back to 2023, I know it's hard we talked about, as we saw the business accelerate how we were rolling out our new go-to-market around the world. We started first in North America and then we went to Europe and then we went into the Middle East and then we went into APAC and finally in LACA. We're now going through and doing that same process rolling out our next-generation platform. And so, we also see some geographic enhancements against the dimensions of new customers, increased transactions, increased principal et cetera. And so, I think the building blocks remain fairly consistent. We are growing new customers at a relatively consistent rate over the last couple of years on a very effective CAC. Those new customers are, in fact, higher quality customers than we were historically acquiring, so they have better retention and they have better transactions per customer, although they are lower revenue per customer, given our more competitive pricing. And as I talked about, we're rolling out the technology platform like we have in Australia into more markets in the world in which those benefits tend to accelerate relative to our existing business on our old legacy technology platform.