Good day. Welcome to The Western Union Company fourth quarter and full year 2020 earnings release conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please limit your questions to one per analyst. 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, Raj 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 may be 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, 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 heroes, 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 continued 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 lessened 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 economy 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 achieved new quarterly highs for customers, transactions, principal, and revenue of $240 million. westernunion.com continued to lead its peer group for app downloads with more than two times any other peer, and we had 49% growth in average active monthly users. Retail money transfer maintained the improved trends we saw in the third quarter, despite additional waves of COVID-19, and Business Solutions and other segment trends improved sequentially. Putting the pieces together, total company revenue, margin, and EPS were all in line or better than expectations in our revised full year 2020 outlook. From a strategic standpoint, we accomplished a lot in 2020. Our agenda was centered on two sets of priorities.
The first, continue getting the organization fit to grow. The second, implementing growth initiatives. Starting with getting fit. We made significant strides with the organization in 2020, essentially completing the WU Way changes that are expected to drive $100 million in annual cost savings in 2021. We also renegotiated more than 250 contracts with agents globally, putting us well on track to achieve the additional three-year $50 million savings target from commissions and third parties. By the end of 2020, we had completed a large portion of the actions that drive the $150 million of annual savings by 2022. Getting fit isn't just getting leaner, it is also adding strength in areas that will improve our competitive position and growth. We continue to improve the coverage and quality of our network, adding almost 100 new agents globally with nearly 20,000 potential new locations.
We reduced inefficient locations and renewed relationships with certain key agents for five or more years. We also increased our account payout capabilities to approximately 120 countries, including hitting our goal of 100 new real-time payouts. Our industry-leading cross-border network got even better in 2020. Another important way we strengthened our position was upgrading our technology capabilities. We brought on a number of tech professionals and made good progress migrating applications to the cloud, making us more agile and able to scale efficiently. These moves have enhanced our progress for key initiatives, including front-end applications like wu.com and dynamic pricing, as well as back-end applications like currency settlement and data management. In summary, we finish 2020 as a leaner and stronger organization, well-positioned to support our strategy in 2021.
Shifting to implementing growth initiatives, 2020 exceeded our expectations for some key growth initiatives and accelerated the pace of our evolution as a global digital-centric payments company. Our overall digital money transfer revenues, which includes wu.com and our digital partnership business, increased 38% to more than $850 million, up from over $600 million in 2019, and are expected to grow to around $1 billion in 2021. The profile of our business changed a lot last year, with digital channels accounting for 29% of transactions and 20% of revenue for our C2C business, up from 16% and 14%, respectively, in 2019. wu.com had an amazing year and grew annual active customers almost 30% to 8.6 million, benefiting from significant investment in customer acquisition.
Customer growth remained highly incremental, with more than 80% net new to Western Union. We saw engagement improve with a 12% increase in transactions per customer and a 25% increase in principal per customer. Importantly, wu.com is enabling us to develop a more direct and sticky relationship with customers closer to an account-based relationship. In the fourth quarter, over 80% of wu.com customers accessed our services through a mobile device. Wu.com customers transact more frequently and have less attrition than retail customers, and those trends are even better for heavy wu.com users. With the strong growth and improving engagement trends, we think wu.com has potential to serve as the centerpiece of a cross-border consumer ecosystem in the future. In addition to our strong wu.com results, our digital partnership business was another big success for us in 2020.
Opening our cross-border platform to third parties was a major shift in our operating philosophy that will enable us to become a more diversified payments company, adding incremental customers and expanding our addressable market. We highlighted this initiative at our Investors Day. It started to ramp up in the second half of 2019, but it really took off in 2020, driving significant revenue and profit growth. It is still early days, and we are encouraged by our progress, adding new partners in 2020 and in early 2021, and working on a large set of prospects. An exciting opportunity that arose from our digital partnership business is our recently announced minority investment in stc pay, a key digital partner. This first tranche of the transaction is planned to close this quarter and would make us a minority owner of what could someday be a high-growth fintech company within the Gulf States.
Winding up this discussion on 2020, I am pleased with how well we managed the business and executed key objectives under challenging circumstances. Looking forward to 2021. We remain focused on how we can create long-term value for our shareholders, balancing opportunities, risks, and options for allocating our capital and strong cash flow generation. Digging into our plan for the year, I'll start with the big picture. According to the prevailing economic forecast, the global economy appears to be on a path of recovery, especially in the second half of the year. Although uncertainty remains higher than normal due to the pandemic. The World Bank currently forecasts a 7% decline in remittances for 2021, which is the same as their latest 2020 remittance forecast from October. You may recall that we grew cross-border principal 12% in 2020 and gained share.
A great example of this was seen in Banco de México fourth quarter remittance data. We believe we will continue to grow principal and gain share this year. We want not only to grow principal and gain share, but to continue to do this profitably. This gives us confidence that we will achieve the 2021 outlook, including mid-single digit constant currency revenue growth. Raj will provide additional details on our outlook in a few minutes. Our 2021 business agenda builds on the progress of 2020, but with emphasis shifting more towards growth initiatives. Our multi-channel network is still the cornerstone of our competitive advantage today. We will continue to focus on improving the coverage, quality and cost. Digital is clearly a top priority, and we have had some big recent additions within the last weeks, including the digital wallet of Alipay in China.
Another social media company in China and a new partner in UAE. We will continue to seek additional partners with account-based relationships that can broaden our network, notably financial institutions, digital wallets, or telecom companies. Speed is an increasingly important factor for cross-border payment networks that we can leverage with potential digital partners and underpenetrated customer segments. We will continue to expand our leading real-time payout network beyond the 100-country goal we reached in 2020. Lastly, we will continue to optimize our retail agent network. In an increasingly digital world, we want to connect with a broader set of customers, and we may consider different relationships and classes of trade to do this. Fortunately, the scale and quality of Western Union's cross-border network and capabilities are a big draw for retailers, illustrated by our recently announced partnership in the U.S. with the world's largest retailer, Walmart.
This is an addition to our existing partnership with Walmart in Canada and Mexico. We will continue to develop our market-leading consumer money transfer business, especially digital. We will continue investing in marketing and customer acquisition to expand our customer base and adding additional digital partners. Last but not least, to expand growth opportunities in 2021, we need to start developing new services and enhancing capabilities, which makes our product and platform functions important areas of focus. We'll continue to upgrade and modernize our technology infrastructure, enhance our product portfolio, and build the right team to execute our objectives for our C2C, B2C, C2B, and B2B business. Basically, a unique and agile cross-border platform for multi-customer segments. In closing, despite the unprecedented times, I am proud of all we accomplished in 2020. In 2021, we are celebrating our 170th anniversary.
Western Union has always been a landmark of innovation, hope, and connection for millions of people and businesses globally. As I think about where our business stands today and our agenda for 2021, I am convinced we are again in the early stages of some compelling developments and success. As usual, a big thank you to our business partners, agents, and consumers all over the world for your trust and loyalty. Stay healthy. With that, I'll turn the call over to Raj.
Thank you, Hikmet. 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 largely 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 reset acceleration of COVID-19 infections and newly introduced U.S. regulations limiting our ability to operate in Cuba for the time being. We believe retail will continue to improve, but the path of 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. Principal 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 label partnerships, transaction growth would have been modestly above revenue growth. As a reminder, digital white label partnerships carry a lower revenue per transaction, or RPT, than Western Union branded transactions due to our role as a processor. It is important to keep in mind that these partnerships are highly profitable and incremental to the company. We anticipate the gap between transaction and revenue growth will continue in 2021 as channel mix and customer acquisition strategies are evolving. Digital money transfer revenues, which include wu.com and digital partnerships, increased 36%, or 35% constant currency, and accounted for 21% of total C2C revenue and 32% of total C2C transactions in the quarter.
The spread between transaction and revenue growth was due to our pricing strategy targeting customer acquisition for wu.com and mix driven by the digital white label partnerships, which have a lower RPT. As noted previously, we expected the year-over-year impact of pricing investments made in wu.com during the fourth quarter would be pronounced due to comping against targeted price increases we took in Q4 2019. Wu.com revenue grew 27%, or 26% constant currency, with cross-border revenue up approximately 38%. Transactions increased 56%, improving sequentially from Q3 and demonstrating the effectiveness of our customer acquisition strategy. We continue to see the pricing environment as broadly stable. As noted earlier, we continued to see strong transaction and revenue growth from our digital partnership businesses. Turning to the regional results, North America revenue declined 3% on both a reported and constant currency basis, with transactions down 1%.
Declines in constant currency revenue and transactions were primarily due to the steady decrease in U.S. domestic money transfer, which was less than 5% of total company revenue in the quarter, and newly introduced U.S. regulations limiting our ability to operate in Cuba for the time being. U.S. offline continued to have solid growth in the quarter. Revenue in the Europe and CIS region increased 3% on a reported basis, or was flat constant currency on transaction growth of 23%. Constant currency revenues were positively impacted by growth in Germany, Russia and France. The primary factor driving the spread between transaction growth and constant currency revenue growth was the digital white label business in Russia. Revenue in the Middle East, Africa and South Asia region increased 1% on a reported basis or was flat constant currency, while transactions grew 12%.
Qatar led the region with solid constant currency revenue growth in the quarter, while the UAE continued to experience softening trends due to the ongoing impact from COVID-19. The spread between transaction growth and constant currency revenue growth was driven by the impact of the incremental digital white label business in Saudi Arabia. This lessened somewhat sequentially because the prior year comp ramped up from the third quarter to the fourth quarter of 2019. The Latin America and Caribbean region continued to steadily recover from the lows in the second quarter, with continued sequential quarterly improvement. Revenue decreased 9% on a reported basis or increased 2% constant currency on transaction decline to 13%. The region continued to face challenges relating to the ongoing impact of COVID-19. Revenue in the APAC region increased 8% on a reported basis or 6% constant currency.
Constant currency revenue growth was led by strength in Australia. Transactions declined 3%, primarily driven by the Philippines domestic business, which had limited impact from revenue. Business solutions revenue improved from Q3 and decreased 8% on a reported basis or 11% constant currency and represented 7% of company revenues in the quarter. Revenue declines were the result of the ongoing impact of COVID-19 on certain verticals like travel and tourism, small and medium-sized enterprises and education, while the overall decline in cross-border trade impacted payment volumes. Other revenues represented 5% of total company revenues and declined 29% in the quarter. Other revenues primarily consist of retail bill payments in the U.S. and Argentina, as well as money orders. The revenue decline was due to the ongoing impact of COVID-19 and the depreciation of the Argentine peso.
Turning to margins and profitability, I will focus on consolidated margins as segment margins are not comparable with the prior year period due to expense allocation changes implemented in the first quarter of 2020. Consolidated GAAP operating margin was 17.9% in the quarter compared to 17.3% in the prior year period. The increase was primarily attributable to productivity savings, additional cost savings, and the timing of marketing investments compared to the last year, partially offset by declines in revenue. We completed the restructuring program in the fourth quarter, incurring approximately $150 million in restructuring expenses over the course of the multi-year program and $12 million of restructuring expenses in the fourth quarter.
The productivity program generated over $50 million in annual restructuring savings in 2020. We expect to achieve the full $100 million in annual restructuring savings this year. In total, we continue to expect to generate approximately $150 million in annual cost savings by 2022, comprised of $100 million of restructuring savings and an additional $50 million from commissions and third-party spending. Adjusted operating margin in the fourth quarter was 18.8% compared to 18.7% in the prior year period, with expansion driven by the same factors stated previously and adjusted for restructuring and M&A costs. Note that in our Business Solutions segment, we incurred a one-time facility closure cost that remained in our adjusted results since it was not part of our initial restructuring program. This one-time cost impacted segment margin by around 1,000 basis points in the fourth quarter.
Foreign exchange hedges had a negative impact of $4 million in the current quarter and a benefit of $7 million in the prior year period. The GAAP effective tax rate in the quarter was 11% compared to 31.4% in the prior year period, and the adjusted tax rate was 11.6% in the quarter compared to 24.5% in the prior year period. The decreases in the company's GAAP and adjusted effective tax rates were primarily due to higher prior period domestic pre-tax income associated with the sales of Speedpay and Paymap businesses, prior period one-time settlements in certain geographies and discrete tax benefits in the current period. GAAP earnings per share in the quarter was $0.43 compared to $0.32 in the prior year period. The increase in EPS was driven by a lower effective tax rate, productivity and cost saving, and lower share count, partially offset by revenue declines.
Adjusted earnings per share in the quarter was $0.45 compared to $0.38 in the prior year period, with the increase due to the factors stated previously and adjusted for restructuring and M&A costs. Turning to our cash flow and balance sheet, year-to-date cash flow from operating activities was $878 million. Capital expenditures in the quarter were approximately $51 million. At the end of the quarter, we had cash $1.4 billion and debt of $3.1 billion. In addition, we have an undrawn $1.5 billion revolving credit facility and no significant debt maturities until 2022. Our financial position continues to be among the strongest within our payments peer group. We returned $93 million in dividends to shareholders in the fourth quarter and had no share repurchases. Furthermore, we announced today that we increased the quarterly dividend by 4% and that we have resumed share repurchases this quarter.
The outstanding share count at quarter end was 411 million shares, and we had $783 million remaining under our share repurchase authorization, which expires in December 2021. Turning to our financial outlook for 2021. First, please note that our outlook assumes that there will be no material worsening in the COVID-19 pandemic. Consistent with the prevailing economic forecast, we believe the macroeconomic environment may begin to improve in the later part of this year as vaccines are more widely distributed. We expect GAAP revenues for the full year to be up mid to high single digits. On a constant currency basis, which excludes the impact of Argentine inflation, we expect revenues to be up mid-single digits. Operating margin is expected to be approximately 21.5%, benefiting from revenue growth and the remainder of the $100 million of annual restructuring savings we will realize this year.
We expect an effective tax rate in the mid-teens range for 2021, and we expect to return a significant portion of our cash flow to shareholders through dividends and share repurchases. EPS for the year is expected to be in a range of $2-$2.10. While we expect solid full-year results, we anticipate quarterly variability in growth rates as we cycle through the impact that COVID-19 had on the business last year. I will provide some thoughts regarding the potential quarterly cadence for 2021. The first quarter of 2021 will be the softest from a year-over-year growth perspective. The total company constant currency revenue growth may be in a similar range to the fourth quarter of 2020. Note that retail has not fully rebounded to pre-COVID levels. The second quarter of 2020 experienced the most significant declines of the year.
Accordingly, the second quarter of 2021 should see the strongest year-over-year growth. The third and fourth quarter of 2020 had similar year-over-year growth trends. Looking at the back half of 2021, we expect trends will be generally stable. We expect Business Solutions trends will continue to be soft in the first quarter. They should improve progressively over the remainder of the year with an expected recovery in broader cross-border trade. To recap, last year, we delivered our adjusted full-year financial outlook and continued to make good progress on key strategic initiatives while maintaining our strong financial position during a period of profound disruption. As you heard from Hikmet, we have a full agenda this year that should position us well for the future.
The strong 2021 financial outlook we issued today demonstrates confidence in our ability to execute against the initiatives we've outlined for the year, along with our expectation that the business should continue to rebound from the disruption caused by COVID-19 in 2020. Thank you for joining our call today, and operator, we are now ready to take questions.
The first question comes from Tien-Tsin Huang of JP Morgan. Please go ahead.
Hello, everyone. Happy to speak to you all. 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%-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. I don't know if maybe some of these agent additions like Walmart are also going to contribute in a meaningful way as well. Thanks.
Hey, let me start here, Tien-Tsin. Nice to hear your good questions. Obviously, we are very pleased with our performance and the recovery of the business, especially also our digital business growth has been exceptional. We are very pleased on that. That's going to continue to happen, right? We do see no reason that's going to not happen. Especially with the economy recovery in the later part of the year, I think that we are convinced about our guidance, and we are really happy how the customers are really sticking to us. Also looks like we are gaining really market share. Our people choosing us, Western Union, they trust us, and we are gaining market share. Also the digital customer acquisition continue to happen. We know that 80% of the customers are new to westernunion.com. This is also huge.
Once customers stay with us, they stay longer, they do more transactions, they use us more often. Generally, I would say that it's great. I'm also very excited about the Walmart addition. Walmart will definitely give us additional customers in our retail business. By the way, retail business is also recovering very well. As the lockdowns are getting less worldwide, as the vaccines are really spreading, I see really good prospects. 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 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. In retail, we do expect the retail part of the business to grow this year but it is going to be volatile. Q1, it's going to follow sort of the company path that I laid out. 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. Digital, the Q2, three, and four last year were very high growth for digital. We're going to see the grow over impact of that. Q1 is likely to be the highest quarter there, and then we'll get some normalization after that.
The B2B business is probably going to have a softer first quarter like the rest of the company, and then improve as the economic conditions improve the rest of the year. I don't see those pieces converging as you had asked, but they're 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. If that was the case, I'm just curious where there may have been a little bit of a upside surprise, if you will. How should we be thinking directionally about that spread in 2021? Should it narrow versus this six-point gap we're currently observing, or do you expect it to stay at similar levels? Thanks.
Sure. Hey, Jason, it's Raj. Yeah, the fourth quarter was about the same as in Q3. I would say generally, overall trends were similar. Retail was relatively stable between the two quarters. 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. Then we also got the benefit of some positive mix in other parts of the business, that's why the spread ended up being similar. As we look at this year, we think there's going to continue to be a spread, our focus really has shifted, Jason, to really the top-line growth. That's why we're really happy that we could give a mid-single-digit constant currency top-line outlook.
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 you have a white label business, you have wu.com that's branded, you have retail, you have the geographies playing a part. Really focused on the top-line growth outlook that we've given. And that's really what's our ultimate objective. Obviously the margin expansion is also a big part of that.
Yeah. I just want to add, just general, Jason, great question, but in our business model, nothing has changed, right? We are going to continue to invest to get more customers, and that's going to continue. We are very much focused on revenue growth and profit growth. I call that profitable growth. That also you could see there also next year the margin expansion is 21.5%. It's important. It's really good results and I like that, how we acquire customers, how we grow the revenue and the profit.
Yeah. The last thing just to add to that one is that, and we said it 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. We obviously expanded margins last year, and we're going to do that again this year. Two years in a row of expanding margins while the digital business continues to track towards $1 billion this year.
Right. Okay. Good stuff. Thank you, guys.
Thanks, Jason.
The next question comes from Darrin Peller of Wolfe Research.
Hey, Darrin.
Hey, guys. Hey.
Hey.
Listen, I wanted to hone in on the westernunion.com monthly active customer growth, which I think was 49% again, which compared to around 45% last couple of quarters. Clearly it's doing well. I'd be curious to hear 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 you actually define as an active user, first of all, would be helpful. 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. I'd love to hear 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 call it Western Union's consumer ecosystem. westernunion.com is an ideal platform to acquire customers and making them stickier. We know that the customers who are using Western Union, they are staying longer, they are stickier, and their use are more often. That's a great acquisition opportunity to have a long-term opportunity here. Within the ecosystem, today the customers are using us for sending money, paying bills. 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 from 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.
I'm very excited about that long-term strategy. Your question regarding the numbers, maybe Raj, you can help me out here.
Yeah. 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 you. 49% growth there. The great thing, as Hikmet said, this is really a sticky business.
Yeah.
The customer have created an account relationship with us, and that's really where they become a repeat customer, they do more transactions. These are good customers to have, and 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. That active user growth kind of metric should be sustainable in your minds? I know I'm trying just to keep it in the same question. Thanks, guys.
Oh, yeah. And these are-
Yeah. I think just like the digital business is going to grow over and it's going to sort of in the second, third, and fourth quarter, it's going to normalize more. We would probably see the same thing happen on the customer metric just because of the impact from last year. The absolute numbers are going to continue to increase this year quite well.
Great. All right. Thanks, guys.
One other thing, Darrin, also, we do see that the westernunion.com also a little bit different customer segment, especially during the pandemic. Let me give you one example. People currently within the European Union or within Europe or within U.S. even, can't travel, right? They used to use their Mastercard or Visa, flying and using their cards and picking up at the received country at the ATM, the money and distributing within the families. Now they are choosing 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. Our marketing programs and our product program promotions are really packaged around that. That's an exciting news.
Okay. That makes sense. Thanks, guys.
Sure.
The next question comes from Rayna Kumar of Evercore. Please go.
Hey, Rayna.
Good evening. Thanks for taking my question. Hi. You made some very strong headway with white label partnerships in 2020. Can you talk a little bit about how your 2021 pipeline could look with new partnerships? 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?
Let me start on the white label.
You want to go first? Yeah.
Rayna, I'll start with 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 late 2019 about our white label and started really. It's 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? I mean, the payments industries have a struggle there. Some banks are choosing, especially when it comes to exotic 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. 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.
Just on the capital return, we're 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. In terms of our priorities, we continue to invest in the business to drive organic growth and expansion. Dividends is a significant use of our cash flow. It'll be almost $400 million this year. We're also looking for the right kind of acquisition opportunity that fits within the cross-border payment space. Lastly, we'll buy back stock. I would just say, Rayna, that to the extent there's 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 we'll be more active this year.
Perfect. Thank you.
Perfect.
Thanks.
The next question comes from Jeff Cantwell of Guggenheim Securities. Please go ahead.
Hey, good afternoon, everyone. Thanks for taking my question. Nice results, and hope you're all doing well.
Yeah. Thanks, Jeff.
Thanks for all the detail in your prepared remarks and this presentation, which I'm increasingly enjoying. There's some great color in there. The guidance for mid-single-digit revenue growth sounds good, and underneath that, I thought slides six and eight drove home how your strategy in digital is working. 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 there this year? This is 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 migrated to digital during the pandemic last year. On the other hand, we see your app downloads look really strong, right?
You're still getting a lion's share of app downloads, that's been persisting since the pandemic, wu.com monthly actives have now increased by 49% year-over-year. I think those are some data points that speak to the fact that you have some real strength on the digital side. I think those are some nice leading indicators that you might potentially have a fairly positive outlook for digital this year. Could you just help us understand how we should be thinking about transaction growth and revenue growth in digital for this year, 2021? Thanks very much.
Thanks, Jeff. First of all, thank you for the compliment for the presentation. I'll give that to my team. They use nice PowerPoint presentations, but it's all about the results. I have to give compliment to my team, how they are 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. Look, 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. The other part is the white label, where banks or financial institutions or businesses use our platform to move money cross-border for their digital customers. Both are having a big prospect opportunity.
On the wu.com business, we're 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. We signed also some banks late 2020 and early 2021. I'm very excited about that. That's going to grow on that part. A $1 billion revenue target is something nice, which motivates all of us, and it's a great opportunity.
Yeah, I think, Jeff, that should give you a sense with [Bart]. We did say that we expect the digital business to get to be approximately $1 billion in revenue this year. It ended at just over $8 50 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. 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. 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.
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.
Okay, great. Thanks for all the color and congrats on the results.
Thank you.
Thanks.
The next question comes from James Faucette of Morgan Stanley. Please go ahead.
Thank you very much. Thanks for all the color and detail on both the results and how you're looking at 2021. Just a quick clarifying question. Then I guess my real question. 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? 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 traditional demographics, especially during the pandemic. Anything you can share in terms of their repeat business or retention has looked like during the course of the rest of 2020?
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.
Yeah. 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. Again, it depends on the other capital priorities, James. That's roughly what we're thinking about. More than the amount, the timing of repurchase is also going to be important. That's what we're thinking there.
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 .com business. We also increased the number of customers by about 30%, and then the principal per customer is also up, I believe, around 25%, we said in the quarter in the .com business. James, I'm sorry, I forgot your third question. There was a third question, I think.
Yeah. Just in terms of what impact stimulus may be having on different aspects.
Yeah. Let me try this one, James. Good question. I think stimulus programs do benefit 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. In general, I would say that the 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 so distributed within the countries that as countries open or close, have a positive impact to our business. 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. As in the U.S., millions of people get vaccines, that will also help our business. The people are choosing, really in the hard times, do choose us. They trust us, and they really use us, and we believe they're 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. Ashwin, we're not able to hear you if you're saying something. Maybe we'll 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 you doing?
Good. How are you, Bryan?
Good. Hanging in there.
Good.
Wanted to talk a little bit about the pricing initiatives in wu.com. It looks like successfully I'm seeing 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.
I think our pricing philosophy, Bryan, generally has 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. Generally, I would say that our pricing has not changed. We are really focused on customer acquisition, especially in .com. One thing is important, Bryan, I always say that profitable growth, right? We are focused on the return. We are focused on profitable growth. It may vary from quarter-to-quarter. It may really vary on the promotions we do with dynamic pricing. As you know, there are so many corridors.
We are active in so many countries with so many currencies, that's what we really, with different brands, we do that. In the past, we were doing more dynamic pricing on a corridor basis. We changed that. In the wu.com, we started to do dynamic pricing based on a consumer relationship, customer relationship. That makes the customer more stickier and our upgrade on our systems, upgrade on our platform has helped a lot of that. We also have our own department with data management, that helps a lot. Khalid and Jay, who runs this .com business, is doing a great job. On that, Raj, do you want to add something?
Yeah, just a couple 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. A lot of what you'll see in the numbers will be more of the carryover impact of the pricing strategies from last year. If you actually look at the yields, just comparing the yields between Q3 and Q4 for wu.com, they were quite similar. In fact, in our entire business, they were quite similar. 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. 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.
Yeah, you can really see the solid growth in digital. Congrats on that, guys.
Yeah.
Thanks.
Thank you.
Thanks, Bryan.
The next question comes from Andrew Jeffrey of Truist Securities. Please go ahead.
Hi, appreciate you taking the question.
Hey, Andrew.
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. I'm also thinking about a competitor's results this morning where revenue grew significantly faster than transactions. 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. Is it mix? Is it price? Is there something else?
Yeah.
I'm just trying to distill it down to its most basic components.
Yeah, I do think you're going to start to see the benefits of some of the 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. That's really going to start to show up here. We're going to get a lot of revenue growth from digital. Our retail business is going to rebound, so that's going to be a piece of it. That's why we were able to give the outlook. I would just say that not only did we grow our digital business a lot last year, but we also grew margins.
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 in size. 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.
Yeah. I will just add also, Andrew, on that. You mentioned competitor, but if you look at our base, $860 million, end up at $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. We want to really achieve our approximate $1 billion-dollar revenue this year. That's also the downloads of apps has been huge on the Western Union apps, on the mobile apps. It's two times, I believe, bigger than the next competitor. 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.
Sure.
The next question comes from Timothy Chiodo of Credit Suisse. Please go ahead.
Great. Thanks a lot for taking my question. I just want to dig into the margin guidance a little bit. 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 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.
Yeah, sure. Nice to speak with you, Tim. Revenue growth is a key driver of the margin expansion. That really gives us the big start here. You're right, we are targeting about $100 million of total savings this year, and that's including the more than $50 million or so that we got last year. There's an incremental amount that will help us on the margin side. We're also investing in the business. Some of it is just catch-up spending from last year. 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 capability. We're also going to spend a little bit more on the marketing side. All of these things combined sort of give us this additional 70 basis points of expansion.
We're really happy to get now two years in a row of margin expansion. We haven't had that for a while. 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. The other thing is that we're going to get an additional $50 million of savings next year. That's part of our original roadmap, getting us to the $150 million of run rate savings. There's more margin potential in the business, and we're really getting back on the right track with this year's outlook.
Returning significant cash back to shareholders. Also adding on that before, besides performing well in our business and giving guidance, returning also cash back to the shareholders by increasing the dividend and share repurchases.
Excellent. Thank you for that context. That's all very helpful. The 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 if you mentioned that.
Cuba we're obviously working to see what we can do to relaunch it. Right now it's closed. It's about 1% of our revenues. Cuba is typically. It's not the biggest impact, but it is about 1% of our revenues.
Okay.
In our-
Go ahead. I think you were about to anticipate my question. Go ahead, please.
Yeah, we've anticipated some of that in our outlook. We already knew that it sort of shut down in mid-November or late November.
Perfect. Thank you so much for taking the question.
Sure.
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.
Hey, Bob. How are you?
How are you? Great. Question, maybe just digging in again to the digital business and kind of the long-term outlook. I understand it's getting close to $1 billion in revenue. 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 something that's the white label. What is the right growth rate, and is this accretive to margins over the long term? 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 are only the beginning of the real growth here of the digital. I really believe that our future is the digital send transactions. 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. I think that especially also having customers acquisition in our system, in our westernunion.com consumer acquisition, we are only or a lot, 8.6 million customers already at. That opens us a huge opportunity to expand our customer acquisition globally. That's something that I am 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 westernunion.com. Look example like Sberbank.
Sberbank is a great partner, they really say that, "Okay, we will like to choose you to send money to all the CIS countries. Can you drop the money for us? And can you do the settlement? Can you do the payouts? Can you do the network activities? Can you do the settlement activities, compliance activities for us?" That's what we are doing. 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. We believe that when they expand their activities in the Gulf States, in other countries, that gives us also additional transaction and capabilities and also customer acquisition. I am excited about that. Raj, you want to add something?
On the margin question you had, Bob. As we said in our last quarter, it's absolutely margin accretive. A lot of the digital business is incremental to us, first of all, then it has a very high margin profile, regardless of whether it's wu.com or digital white label. You've seen, I think I said it earlier, the digital business has grown. Now this year, it'll be about $1 billion, we've continued to expand margins over this period. I think that really is the case in point about the profit profile of the digital business.
Thank you. Raj, I thought I heard you or Hikmet just to clear, did you say as far as capital return that you're focused on looking for an acquisition in cross-border payments? If so, if I heard that right, I wonder if you could give any more color on that.
Oh, yeah.
What you're looking for.
Trying to make a generic comment that that's a top priority for us. In terms of our capital priorities, it's really investing in the business. 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 the cross-border payment space. We return our excess cash through stock buyback. That's the order that we think through cash usage. 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 roadmap.
Great. Thank you. Appreciate it.
Sure.
This concludes our question and answer session. I would like to turn the conference back over to Brendan Metrano for any closing remarks.
Yep. Thank you, Andrew. 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.