Western Union - Earnings Call - Q4 2018

Transcript

Speaker 0

Afternoon, and welcome to the Western Union Fourth Quarter twenty eighteen Earnings 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 Mike Salup, Senior Vice President of Investor Relations.

Please go ahead, sir.

Speaker 1

Thank you, Laura. On today's call, we will discuss the company's twenty eighteen fourth quarter results and the 2019 financial outlook, 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 and Exchange Commission, including the 2017 Form 10 ks 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've 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 I would now like to turn the call over to Hecan Arce.

Speaker 2

Thank you, Mike, and good afternoon, everyone. Overall, our business continues to produce stable results as our customers remained resilient despite slowing global economic growth in parts of the world. Digital remains strong with westernunion.com transaction accelerating to 25% growth in the quarter, which translated into 22% constant currency revenue increase. In addition to ongoing strength in our U. S.

Outbound digital business, we are also making great progress in increasing westernunion.com penetration and growth in key European markets including France, The UK and Germany. For our entire Money Transfer business, revenues increased 1% in constant currency. Transactions, however, increased 4% in the fourth quarter and cross border principal volume grew 8% in constant currency terms, so underlying metrics are sound. Business Solutions showed improvement with revenues increasing 5% constant currency led by strong growth in Europe. We again delivered good performance in the payments area of B2B, including the education vertical.

This quarter, however, we also had good growth in foreign exchange services aided by customer hedging related to increased foreign exchange volatility. The bill payments businesses posted mixed results with the Argentina results in U. S. Dollar terms continuing to be heavily impacted by negative currency translation. From a profit perspective, margins were solid at 19.3% for the quarter and 20.1% for the year as effective cost management and our Wu Way Lean programs contributed to stability.

Operating cash flow for the year came in as projected as we generated over $800,000,000 and we returned over $740,000,000 to shareholders in 2018 through dividends and share repurchases. We are also very pleased to announce today a 5% increase in our quarterly dividend raising it to $0.20 per share or $0.80 on an annualized basis. As we begin 2019, we remain focused on driving digital expansion and growth, offering our cross border platform to new payments areas and generating additional operating efficiencies. We made good progress on these initiatives in 2018. I mentioned the strong results we experienced with simian.com, which exceeded $500,000,000 in revenue last year.

Our digital expansion efforts to drive future growth also continued to ramp up as we launched approximately 20 new westernunion.com or mobile app markets over the last year, particularly in Asia, Latin America and The Middle East. Consumer can now access our online or mobile services to initiate transactions in more than 60 countries plus many territories and our digital penetration covers markets that represent approximately 75% of global remittance market principle. We believe this will give us additional future revenue growth opportunities for our digital business. In addition, we embedded digital money transfer services into more third party platforms such as Safaricom in Kenya and added large principal transfer products for our westernunion.com services in The UK. We also continue to expand our bank account payout services as we now have the capabilities to send to nearly 100 countries and territories reaching billions of accounts and we are seeing strong growth in account payout transactions.

The combination of our extensive retail footprint and our growing digital presence and account payout network creates a very strong proposition for consumers, providing them the ability to send and receive in whichever method and currency they prefer around the world. Looking at our progress with new cross border payment opportunities, in October, we announced our collaboration with Amazon in which we utilize our global platform to process international e commerce payments. Under this agreement, Amazon customers in various markets will have a new way to pay in person at our retail agent locations. Over the last few months, we have launched pilots for this service in 10 markets, mainly in Asia and South America. Coverage in these markets is now being increased and we are working with Amazon on the expansion roadmap for additional countries in the future.

Turning to our operational efficiency accomplishments, the Wu Way continued to help us run the company better. We implemented more than 40 lean deployments last year, trained more than 6,000 employees on lean processes and achieved approximately $70,000,000 in run rate savings from Wu Way driven efficiency programs. These savings help fund investment in growth initiatives technology and core proficiencies such as GDPR. In 2019, we will continue to push forward these strategies. On a macro level, there is uncertainty on economic growth in many parts of the world as well as foreign exchange headwinds and geopolitical concerns, but we expect stable financial performance in 2019.

Our business is very diverse with 20,000 corridors and no one country outside The U. S. Representing more than 7% of our revenues. Historically, our customers have been resilient even in challenging economic times. Our transaction and principal trends were healthy exiting 2018 and we expect that to continue.

We believe the pricing environment will remain stable and do not expect major pricing changes in 2019. Overall, our 2019 outlook calls for a low single digit constant currency revenue growth and operating margin of approximately 20% and continued strong cash flow generation and return of funds to shareholders. Raj will give you more information on the 2019 outlook in a few minutes. And right now, I would like to turn the call over to him to provide more details on the fourth quarter results.

Speaker 3

Thank you, Hikmet. As I review 2018 financial results, I will focus primarily on the fourth quarter. The similar information for the full year can be found in our press release and the attached financial schedules. Fourth quarter revenues of $1,400,000,000 declined 3% or increased 2% on a constant currency basis compared to the prior year period. Currency translation net of the impact from hedges reduced fourth quarter revenues by approximately $69,000,000 compared to the prior year, primarily due to continued declines in the Argentine peso.

The decline in the 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 80% of company revenues in the quarter, revenues declined 1% or increased 1% constant currency, while transactions grew 4%. Total C2C cross border principal increased 5% or 8% on a constant currency basis, while principal per transaction was flat or increased 3% constant currency. The spread between C2C transaction and revenue growth in the quarter was 5% with a negative 2% impact from currency. Mix had a negative impact of approximately two percentage points in the quarter, while pricing had a negative impact of 1% compared to the prior year period.

The 1% pricing impact primarily reflects actions taken in The Middle East earlier in the year. Excluding The Middle East, the net pricing change for the rest of the world was positive both for the quarter and the full year. Turning to the regional results. North America revenue was flat on both a reported and constant currency basis, while transactions grew 2%. The U.

S. To Mexico corridor delivered strong revenue growth in the quarter, but this was offset by continued declines in The U. S. Domestic money transfer business. In the Europe and CIS region, revenue increased 1% or 2% on a constant currency basis, led by France and Spain, while transactions in the region increased 8%.

Revenue in The Middle East, Africa and South Asia region declined 7% on a reported basis or 6% constant currency, while transaction growth improved to 3% as the previously implemented price reductions are delivering good results in driving volume. The Latin America and Caribbean region continued to deliver strong constant currency revenue growth driven by Argentina, Ecuador, Peru and Brazil. Revenue in the region was flat in the quarter or increased 16% constant currency, while transactions grew 11%. In the APAC region, revenue declined 9% or 8% constant currency and transactions were down 4% with Australia, China and New Zealand contributing to the decline. Westernunion.com continued to deliver strong growth as revenue grew 21% or 22% constant currency on transaction growth of 25%.

Westernunion.com represented 12% of total C2C revenue in the quarter and for the full year. Business Solutions revenues increased 3% or 5% on a constant currency basis and represented 7% of company revenues in the quarter. Other revenues, which consist primarily of our bill payments businesses, decreased 11% in the quarter or increased 10% on a constant currency basis and represented 13% of total company revenues. The Pago Fossil walk in business in Argentina continued to grow transactions and local currency revenue aided by inflation by declined in U. S.

Dollar terms, while our Speedpay U. Electronic bill payments revenue also declined in the quarter. The depreciation of the Argentine peso negatively impacted other reported revenue by 21 percentage points in the quarter, while Argentina inflation is estimated to have positively impacted other reported and constant currency revenues by approximately 11 percentage points. Turning to the margins and profitability, our consolidated GAAP results reflect some significant special items primarily in the prior year, so I am providing the adjusted metric comparisons to better reflect the fundamentals of the business. The adjusted metrics in the current quarter exclude the impact of tax expense related to changes for the accounting of The U.

S. Tax Act. I refer you to our press release tables for a detailed listing of the adjustment item amounts for the prior year quarter and full year. The consolidated operating margin in the fourth quarter was 19.3%, up from 18% in the prior year on an adjusted basis. The adjusted operating margin expansion was driven by lower bad debt, marketing and incentive compensation expenses, which were partially offset by higher other corporate expenses and technology spending.

Foreign exchange hedges provided a benefit of $4,000,000 in the current quarter compared to a negative impact of $7,000,000 in the prior year period. We achieved approximately $10,000,000 of incremental savings from Wu Way initiatives in the fourth quarter, which gave us approximately $45,000,000 of incremental savings for the full year. On an absolute basis, we achieved approximately $70,000,000 of savings from Wu Way for the year. EBITDA margin was 24.2% in the quarter, which compared 22.5% in the prior year period on an adjusted basis. The GAAP effective tax rate was 9.8% in the fourth quarter.

On an adjusted basis, the tax rate was 6.3 compared to 14.3% in the prior year period. The decrease in the adjusted tax rate was primarily due to discrete items in the current year period. As we previously stated, certain of the impacts related to the Tax Act enacted in December 2017 were provisionally estimated and additional effects were recorded during each quarter in 2018. In the fourth quarter, changes in our estimates related to the Tax Act resulted in an $8,000,000 tax expense. The accounting for the Tax Act was completed during the fourth quarter, there will not be any additional adjustments going forward.

Adjusted earnings per share in the quarter was $0.49 which compared to $0.41 in the prior year period. The increase in adjusted earnings per share was primarily due to the increased operating profit margin, a lower effective tax rate and fewer shares outstanding partially offset by lower reported revenues. The C2C margin was 23.3%, which compared to 21.5% in the prior year period. The margin increase was driven by lower bad debt, marketing and incentive compensation expenses, which were partially offset by higher technology spending. Business Solutions operating margin was 5.4% in the quarter compared to negative 3.2% in the prior year period.

The increase in operating margin was primarily due to high technology and other operating expenses in the fourth quarter of last year. Business Solutions EBITDA margin was 16.2%, which compared to 8.1% in the prior year period. Operating margin for the businesses included in other was 1.8% in the quarter, which compared to 7.9% in the prior year period. The year over year margin decline was primarily due to lower revenue and higher corporate expenses as certain corporate expenses including spending for M and A and other strategic action activities are recorded within other. Turning to our cash flow and balance sheet.

Cash flow from operating activities was eight twenty one million dollars for the full year, which includes the negative impact of approximately $200,000,000 related to payments on special items. Capital expenditures in the quarter were approximately $91,000,000 At the end of the quarter, we had cash of $973,000,000 and debt of $3,400,000,000 We returned $133,000,000 to shareholders in the quarter, including $84,000,000 in dividends and $49,000,000 of share repurchases, which represented approximately 3,000,000 shares. The outstanding share count at quarter end was $441,000,000 shares and we had $544,000,000 remaining under our share repurchase authorization, which expires in December. Turning to our outlook, we expect stable financial performance in 2019 despite a slowing global economic environment. Similar to 2018, we expect a low single digit constant currency revenue increase excluding any benefit related to Argentina inflation.

Due to the strength of the dollar against the Argentine peso and major European currencies, we expect reported revenue growth to be in a range of a low single digit decrease to a low single digit increase. Operating profit margin is expected to be approximately 20% as we continue focus on cost efficiencies and lean management implementations to offset investments and some negative impact from foreign exchange. We expect an effective tax rate of approximately 17% to 18% in 2019, including negative incremental impact from The U. S. Tax tax BEAT provision.

We have identified and are in the process of implementing structural actions to mitigate the adverse impact of BEAT for the future. The 2019 rate outlook includes partial benefits from our mitigation efforts as they are rolled out during the year. We currently expect the effective tax rate in 2020 to be lower in the mid teens level, reflecting the full effect of mitigation. Due to the increase in tax rate this year, our 2019 outlook anticipates full year earnings per share to be in a range of $1.83 to $1.95 while cash flow from operating activities is expected to be approximately $1,000,000,000 As we have mentioned previously, we are currently considering various strategic alternatives for certain of our business units, but do not have anything to announce at this time and there is no assurance any transaction will occur. If we were to complete a divestiture during the year, our outlook would need to be adjusted to reflect the related revenues and profits that would be removed as well as the impact of any use of proceeds.

So to summarize, we delivered our full year adjusted financial outlook in 2018 and made good progress on key strategic initiatives. We continue to generate solid cash flow and return significant capital to shareholders through dividends and repurchases. In 2019, we expect stable business, solid margins and continued strong allocation to shareholders. Operator, we are now ready to take questions.

Speaker 0

We will now begin the question and answer session. And our first question will come from Tien Tsin Huang of JPMorgan.

Speaker 4

Hi, good afternoon. Thanks for all details as always. Just on I'll start on the.com business. You mentioned acceleration. You mentioned new countries.

I'm curious if you have an outlook for 2019 and what is it driven by? Is it again more country expansion? Or are you just getting more penetration within your existing countries? Thanks.

Speaker 2

Hi, Tien Tsin. Good afternoon. I think both will continue to do that because our U. S. Outbound digital business is very strong and these are done by our existing customers, but these are we've been here for a longer time.

And as you know, we are also in the European Union countries longer time with our westernunion.com transaction. So that's going to continue. But we are also very excited finding new customer segments in our new countries. And once you launch a country, it takes some time with the marketing activities and you win customers, but the growth rates are very promising. We came in Q4 also with a 25% transaction growth, which is also very encouraging.

And we are just starting in Middle East and Asia with our expansion. I think that's really encouraging numbers. So that gives us additional channels. And still these customers are new to us, additional customers doesn't cannibalize our existing business.

Speaker 4

Okay. And just on my follow-up quickly, just I want to ask on Wu Way. I heard the $70,000,000 in savings, but how where are you now in terms of potentially seeing better revenue production from Wu Way? Where are the investments going? Maybe just a quick update there.

Speaker 2

Yes. I think we are still very excited about the Wu Way initiatives. I think there's still room from efficiency side, also from growth opportunities, how we implement that. Our focus is definitely on digital growth. And we do when we launch a new country, we do launch it with Wu Way initiatives.

The Amazon the Amazon Pay, how we offer our platform to Amazon, the collaboration with Amazon was done all via Wu Way, and that has been launched in 10 countries now. And we are just starting to promote that in the 10 countries. And from the efficiency side, I still believe there is some room. And we gave our guidance about 20% margin for 2019. And while we do this efficiency program, we do invest also on the growth that is going to continue to happen.

And we are Wu Way is definitely the way we operate.

Speaker 3

And Tien Tsin, the €70,000,000 that is our full run rate. We don't plan to call out any further savings there, but we will keep driving for lean and operating efficiencies and keep reinvesting in the business.

Speaker 4

Understood. Thank you, guys.

Speaker 2

Thank you.

Speaker 0

Next question will come from Brian Keane of Deutsche Bank.

Speaker 5

Yes. Hi, guys. Thanks for taking my questions. I wanted to ask about the regions. In the North America region, I see transactions accelerated in the quarter, at least year over year from 1% to 2%.

But constant currency, revenues went down a couple of points. Then EU and CIS similar transactions remain the same at about 8%, but the constant currency revenues dropped a couple of points. Just curious what's causing that and is that the mix that you called out there?

Speaker 3

Brian, hi, this is Raj. In North America, what you're seeing on the revenue side is it grow over from higher foreign exchange spreads we had in the previous year fourth quarter. And some of those spreads were reversed during the course of the year. But transaction growth, as you mentioned, continued to accelerate. So that's good.

Our U. S. Outbound business actually did quite well. We had 7% transaction growth there, which has been accelerating during the course of the year, but some of the pricing and mix impacts have the impact that you're referring to. And then in Europe and CIS, the .com business overall grew very well during the course of last year and in the fourth quarter and also our DMT business in France.

So those had some mix impacts. The slowdown in the fourth quarter is again related to higher FX spreads that we had earlier in the year in those markets that we reversed part of those. So transaction trends have been quite healthy and just some of the mix and pricing impacts are having the revenue impact that you're seeing there.

Speaker 5

Okay, got it. Got it. And then Hikmet, just thinking about the new opportunities that you're talking about for cross border, is there a way to quantify that in terms of a revenue opportunity those could produce?

Speaker 2

We don't give that revenue guidance there, but I believe there's a new opportunity additional customers like we did it with westernunion dot com. These customers like offering our platforms to third party like Safaricom or Amazon Pay are really new customers that we didn't offer that. And that's the only way they can do transactions because if you are in Brazil, a local currency owner, is it in form of card or cash, you can't do international transactions because you can't use your credit card international credit card. There's no international credit card. But the people want to buy online, want to buy global and pay local.

And that's the really our platform, which we developed over years, enables that technology wise, compliance wise and settlement wise do that. So we are very excited about that. And Amazon is definitely a partner, but there are other also opportunities to expand our platform to new payments capabilities, paying local, buying globally, definitely something we are excited about.

Speaker 3

Okay, great. Thanks for the color guys. Thank you. Thank you.

Speaker 0

And the next question comes from Darrin Peller of Wolfe Research.

Speaker 6

Hey, guys. Thank you. Just when you go into the mix impact, hey, on the C2C segment that drove the two points of difference between transaction growth and revenue growth, and I think you mentioned one point pricing. You just explain a little more around the mix you're talking about? And then when we think of 2019 outlook, just if that's going to persist, that kind of a mix impact is going to persist?

Speaker 3

Yes. Hi, Darren. The mix is something that we don't really try to forecast. It's difficult to forecast. It really is related to where the growth is coming from.

It's mostly geographic mix around the world. So what it means ultimately is that we're getting faster growth and lower revenue per transaction corridors and that's what you're seeing coming through. It varies a little bit. This time it was minus two and it also has to do with product mix, but mostly it's a geographic mix issue that's showing up there. So it's not something that we try to forecast overall, but our revenue outlook envisions whatever might happen there.

Speaker 6

Okay. I guess just a higher level question then. We're seeing very strong growth of the .com business continue and to your point accelerate. And I guess it just feels like at some point there should be an inflection where it's big enough to more than offset some of headwinds that you've seen, whether it's on mix or it's pricing and potentially something that starts to align more with the volume growth on cross border or even the transaction growth on cross border you're seeing, which is higher than revenue. When did can you give us a little idea as to when you think that could really start to show and materialize so that the digital side is big enough for you that it offsets other areas?

Speaker 3

Well, digital our wu.com business is it's obviously much larger than it was a few years ago. It was over $500,000,000 last year, but it's still only 12% of consumer revenues. So it's going to I don't know when that inflection point is. Clearly, digital, we still see very strong growth opportunities. Retail, we think will be a flattish type grower, maybe low single digits.

But we have had negative growth in some of our other areas, which is really what's dragging us down. Wolves accelerated, which is good, but our bill payments businesses were negative, particularly Speedpay. So we need to get better overall performance there. If we could get to mid single digit type of growth and that gives us good flexibility in what we can do overall. So not just digital, digital certainly has to be there, but other components of our business also have to perform a little bit better than they have been.

Speaker 6

Right. So is there anything just and I'll leave it at this, but anything more you think that's possible to do from a restructuring standpoint beyond this potentially the B2B business we've talked about? Maybe it's the sort of the domestic money transfer. Anything else that can be done around a restructuring that could help the overall growth profile in a more near term manner? Thanks again, guys.

Speaker 2

Yes. I think, yes. I mean, we are looking constantly about the structural opportunities in growth areas and on the efficiency margin part. Obviously, we in the retail money transfer business, Raj described earlier, I think it's going to we have a good market there, and it's going to be flattish. But the growth will come from digital environment.

And it's already the 12% of our revenue. It's the largest by far in the digital money transfer environment. And the countries we rolled out, they will come also and adding additional customers. So I think if you really keep the customers on the retail side and add customers from the digital side, our C2C business is quite solid and will drive the growth. I think we have to really look at our payments part payments business.

And on the payments part, the volatility last three months helped us on the B2B business. But that student pays, the payments business C2B business is growing very well and we are building on that. We have to fix some the BMT and the domestic business and the Speedpay domestic business has been a challenge, right? And then we that has an overall impact to our company's performance. And the domestic businesses has been something we are focused not to turn around.

Speaker 6

Okay. All right, guys. Thank you.

Speaker 3

Thanks, Darren.

Speaker 0

And the next question comes from Jim Schneider of Goldman Sachs.

Speaker 7

Good afternoon. Thanks for taking my question. The Latin American region is one that continues to put up very good revenue growth for you. I think you talked about The U. S.

Outbound and Mexico in particular. Can you maybe kind of call out, a, any other countries or geographies that really contributed to that? What initiatives you have going in other countries? And then b, to what extent that was helped by the addition of vu.com in those quarters?

Speaker 3

Hey, Jim, this is Raj. The Latin America revenue growth is really the outbound growth from Latin America, if that's what you're referring to. That was driven, as we've mentioned, by Argentina, Ecuador, Peru, Brazil. So we've had a quite healthy growth in some of those other markets even though Argentina was impacted on a reported basis by the currency devaluation that other markets have been doing quite well in that region. So the conditions are quite good.

It's a relatively small piece of our overall revenues. Latke is about 9% of total C2C revenues. So we've seen continued good performance there at least on a constant currency basis. And then in terms of .com, it's certainly a focus that we have in terms of expanding .com presence in Latin America. So that's really what we're focused on.

Speaker 2

Yes. I think Jim, generally C2C business has been stable, especially the cross border. C2C business is really stable. Latin America, as Raj said, is a smaller part of our business, but we had also strong growth in despite besides U. S.

Outbound also in Europe. UK, Germany and France have been going very well. But we also see now good transaction growth in The Middle East. As you recall, Jim, last year, we implemented some promotions there. Now they are showing good returns.

I think that's also a good sign and shows how stable our business is. So digital growth is definitely driving the top line, but there are also very stable numbers in the retail money transfer business.

Speaker 7

That's helpful. Thanks. And then maybe as a follow-up, some of your payments peers have kind of noted a notable slowdown in cross border travel. And while I understand most of your trends are driven by migration, which are longer term things, are you seeing anything in the business as you start Q1 that gives you a little bit of pause in terms of a potential macro slowdown? And to what extent is that baked into your guidance?

Speaker 2

Well, macro environment is definitely challenging. But as you look at our business, we are in 200 countries. We have 20,000 corridors. So we clearly are a portfolio play in our case, right? So we do actually don't see big changes on economical environment in the retail money transfer business.

On the online on our.com business, even strong growth continued to happen, strong growth. And Q4 exit was very good, especially, as I mentioned earlier, in transactions and in principal amount. It was constant currency, principal was about 8% growth in Q4. And so I think the environment is stable. However, there is some concerns global concerns on the economical environment.

Speaker 7

Thank you.

Speaker 0

And next we have a question from James Faucette of Morgan Stanley.

Speaker 8

Thank you very much. I wanted to follow-up on wu.com. And as you're expanding into new markets and corridors, what are you having to do from a pricing perspective to encourage and attract volumes? And how should we think about the pricing opportunity set over time? That answers my first question.

Speaker 3

Jim. This is Raj Agarwal. When we expand into new markets, we really look at the digital business as being new incremental revenues to us. So we go into any new market, making sure that we price competitively with whatever else might be available in terms of that similar service. Now we have a very unique service offering because the majority of our revenues payout at retail locations, even though they may be digitally initiated.

So we do try to price competitively and it doesn't really carry the legacy of the retail business. So it's a new incremental business to us. We price it very competitively to try to get the business and it's really about marketing and acquiring new customers more than anything else in terms of it's not really driven by the pricing. We're going to make that a competitive offering and then we just need to tell consumers about the offering.

Speaker 8

Got it. And then I guess from a 2019 outlook, you guided roughly 20% margins. In 2018, in different parts of the year, you were a bit above this level. So can you talk to what would be the puts and takes that would allow you maybe to get back above 20% potentially in 2019?

Speaker 3

Yes. I mean, we're comfortable with our 20% margins. It could be a little bit above, a little bit below. It just depends on how things play out. If you look at the pieces, we are investing in the growth opportunities like digital, like the relationship we have with Amazon.

We're also investing back in regulatory items like privacy and other areas. And then when we are in a low growth environment like we are and we have negative FX impacts, it's more challenging to get leverage on our cost structure. So we do need to get better revenue growth overall to be able to drive better margins, which is our objective. But for this year, we're comfortable with 20% level.

Speaker 8

Thank you very much. Sure.

Speaker 0

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

Speaker 5

Hey, thanks. Good afternoon, guys. Just wanted to start on C2C. I know the constant currency revenue growth there, I think came in at 1%, a little bit below recent trend and the comp is kind of tough in Q1. And so I just wanted to get a sense of how we should think about the near term trajectory on C2C in constant currency terms?

Speaker 3

Yes. I mean, don't give an outlook on a specific business unit, Jason. But if you just think about the pieces, the retail business is likely to be a flattish type grower and digital, we continue to see good growth opportunities there and it's going to become a bigger and bigger piece. I think the consumer business overall will be solid and stable. It really is about

Speaker 0

getting