Good afternoon, and welcome to the Western Union fourth quarter earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. 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 Brad Windbigler, Head of Investor Relations. Please go ahead.
Thank you, Andrea. On today's call, we will discuss the company's fourth quarter and full-year results and our financial outlook for 2020, and then we will take your questions. The slides that accompany this call and webcast can be found at westernunion.com under the Investor Relations tab and will remain available after the call. Additional operational statistics have been provided in supplemental tables with our press release. Today's call is being recorded, and our comments include forward-looking statements. Please refer to the cautionary language in the earnings release and in Western Union's filings with the Securities and Exchange Commission, including the 2018 Form 10-K, for additional information concerning factors that could cause actual results to differ materially from 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. Although the expenses that have been excluded from adjusted metrics are specific to those initiatives, these types of expenses may be similar to types of expenses that the company has previously incurred and can reasonably be expected 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.
Before I turn the call over to Hikmet Ersek, I would like to take the opportunity to announce that we have brought in a new dedicated leader for investor relations, Brendan Metrano, who joins us from Evercore ISI, where he was an equity research analyst. You'll be hearing more from Brendan in the near future. Hikmet?
Well, thank you, Brad, and good afternoon, everyone. I am pleased to say that our business delivered solid results in the fourth quarter, driven by continued strong performance in our digital offerings. Fourth quarter revenue increased three percent on an adjusted constant currency basis, and adjusted EPS was $0.38. For the full year, our adjusted results were in line with the financial outlook we provided with third-quarter results. Returning cash to shareholders remained a priority as we returned over $880 million to shareholders in 2019. I am pleased that today we also announced a 13% increase in the quarterly dividend, which reflects the strength of our business and strong profit expectations for 2020 and confidence in our new global strategy.
2019 was a pivotal year for Western Union as we made significant progress towards our vision of being the leader in cross-border, cross-currency money movement and payments and delivered strong financial results. I would like to take a moment to review some of the key strategic accomplishments from 2019. First, we simplified and created a sharper focus for the business, largely completing our exit from non-core operations with the sell-off of Speedpay U.S. domestic bill payment service and the U.S. Paymap Mortgage service in the second quarter. The $750 million in proceeds funded enhanced cash returns to shareholders. With the divestitures and smaller domestic money transfers, our business is now primarily focused on cross-border services for consumers, financial institutions, banks, and other businesses. Our focus aligns with our core competencies in foreign exchange, cross-border settlement, compliance, and global retail and account payout network.
Second accomplishment in 2019 was we continued to expand our digital business. The westernunion.com service now accounts for 15% for consumer revenues, and cross-border revenue increased 26% in the fourth quarter. We also began unlocking the value of our leading global physical and digital cross-border, cross-currency platform, opening into third-party partners. For example, we added two significant customers, among others, stc pay and Sberbank. Our total digital money transfer revenues increased 24% reported or 25% constant currency in the fourth quarter. Today, we operate one of the most extensive digital platforms for cross-border, cross-currency money movement, whether branded direct offerings like westernunion.com or digital offerings that enable our partners like TD Bank, Sberbank, or stc pay. Both westernunion.com and white label offerings continue to have very strong growth potential.
We have recently integrated digital services with three of Europe's largest postal institutions, France La Banque Postale, Italy's Postepay, and the U.K. Post Office. We also recently announced a new partnership with Bharti Airtel, a global telecommunications company with operations across Asia and Africa. We will soon offer real-time payments into millions of Airtel payments bank accounts in India and mobile wallets across 14 countries in Africa. We have established non-remittance white label payments use cases, such as our partnership with Amazon for global e-commerce payments, further expanding our addressable market to consumer-to-business payments. In business payments, Western Union Business Solutions continued its growth trend, led by strong performance in the education and financial institution verticals, which translated into solid revenue growth of four percent on a constant currency basis for 2019. It was a quite good year.
While we made significant progress in 2019, we are not content, and we'll continue to drive our business forward in 2020. We laid out our strategic vision at our September Investor Day. I would like to highlight three key strategic objectives we will focus on in 2020: enhancing our global network, driving our digital growth, and optimizing our organization. We will work to enhance our global payments network, improving the cost coverage and quality, and further leverage it with additional third-party partnerships. Today, our vast platform capabilities include both digital and physical money movement networks, with over 550,000 locations across more than 200 countries and territories, digital send capabilities in over 70 countries, and bank account payout capabilities in over 100 markets, offering access to billions of accounts.
We will continue to grow our network, and we'll also improve the quality by adding new value-added services like real-time account payout, which we expanded during 2019. We now offer customers the ability to transfer funds into an account in real time in over 20 countries, with plans to expand it to over 100 countries this year. The value-added payout services should help us gain new customer segments, such as e-commerce and financial institutions. We will drive our digital strategy forward to serve consumers whenever, wherever, and however they desire, and expand aggressively over the next few years, including large opportunities like the $120 billion outbound market in the Gulf States or the $25 billion outbound market in China and India. Our goal is to evolve in the world's ultimate agnostic network for payments and cross-border money movements.
We are also transitioning our Western Union branded consumer business from a transaction-based model to a lifetime value model, optimizing the customer experience and improving retention. To achieve this goal, we have further developing and applying strong data analytic capabilities to our rich pool of global data over 200 countries, allowing us to price dynamically, market more precisely, and ultimately enhance our ability to drive revenue growth. Our third strategic objective is to strengthen and optimize our organization. Western Union has tremendous talent. Building on the foundation of WU Way lean capabilities and the transformation office, we will leverage internal resources more effectively to improve execution, enhance profitability, and drive margin expansion. In addition to that, we will continue to selectively add new team members who can impact our business. A great example is the recent addition of Shelly Swanback, our new President of Product and Platform.
Shelly comes to Western Union from Accenture, where she was instrumental in building the firm's digital services. Shelly reports directly to me and play a critical role in enhancing our global platform. Finally, while we will continue to focus on driving shareholder value with strong financial results, we will also focus on delivering value for all stakeholders through our environmental, social, and governance efforts. The details of these efforts can be found in our 2018 ESG report. We plan to issue our 2019 ESG report later this spring. One more thing. During the past month, we have also achieved a significant milestone in our U.S. joint settlement agreements. The term of the deferred prosecution agreement with the Department of Justice expired on January 19th. Under the DPA, to close out this matter, the DOJ has 90 days from the expiration to file for dismissal of the charges.
We understand that DOJ will make a motion to dismiss the DPA promptly. We will continue to work to protect our customers and partners by maintaining strong compliance programs, which we believe give us a competitive advantage. In closing, we made significant progress in 2019, and we begin 2020 better positioned than ever before to capitalize on the significant opportunity in the large and growing money transfer and global payments market. I am confident in our ability to deliver the 2022 margin and EPS targets, and our outlook this year reflects our expectations for a strong start to achieve our goals. Raj will discuss our financial outlook and long-term targets in more detail. I remain excited about our long-term prospects and would like to thank all our team members for their hard work and commitment.
A big thank you to our business partners, agents, consumers, and shareholders from all over the world for your trust and loyalty. With that, I'll turn the call over to Raj.
Thank you, Hikmet. I will focus my comments primarily on the fourth quarter. The similar information for the full year can be found in our press release and the attached financial schedules. Given the impact of the divestiture on prior period comparison and restructuring costs from our productivity program, there are a number of gives and takes in our fourth quarter results. Our adjusted results remove most of the impact of the factors which will not affect our future results. Fourth quarter revenue of $1.3 billion declined seven percent compared to the prior year period, while adjusted constant currency revenue, which excludes our divested businesses in the prior year period, increased three percent. Currency translation, net of the impact of hedges, reduced fourth quarter revenue by approximately $42 million compared to the prior year, primarily due to the depreciation of the Argentine peso.
The decline in peso negatively impacted reported revenue by two percent, while the effect of inflation on our Argentina businesses is estimated to have positively impacted both reported and constant currency revenue by approximately one percent. In the Consumer-to-Consumer segment, reported revenue was flat or increased one percent constant currency, while transactions declined one percent, primarily due to some civil unrest, macroeconomic and market-specific issues in a few countries. Total C2C cross-border principal increased 1% or 2% on a constant currency basis. Principal per transaction was flat or increased 1% constant currency. The spread between C2C transaction and revenue growth in the quarter was 1%, with a negative 1% impact from currency. Pricing was higher in the fourth quarter compared to the prior year and was largely offset by mix. The net impact was positive on revenue in the quarter.
Turning to the regional results, North America revenue grew one percent on a reported and constant currency basis, while transactions declined four percent. Revenue growth in the region was led by the U.S. to Mexico corridor and other U.S. outbound businesses, which was partially offset by continued declines in U.S. Domestic Money Transfer. USDMT trends were similar to last quarter, and we expect declines will continue this year as we manage the business for cash flow. Revenue in the Europe and CIS region increased one percent or two percent on a constant currency basis, driven by Spain, Russia, and France. Transactions in the region increased five percent, aided again by the Sberbank white label business. Revenue in the Middle East, Africa, and South Asia region was flat on both a reported and constant currency basis.
Revenue trends in the region reflected slower growth in Saudi Arabia and the UAE in the quarter, civil unrest in Lebanon, and continued hard currency limitations in certain African markets. Transactions declined one percent as strong growth in digital transactions was offset by declines in retail. Sends from the region to India were negatively impacted by a cash tax implemented in September that impacted our agents' ability to make cash payments. It was subsequently removed, but it may take some time to return to previous transaction levels.
We are also making adjustments to marketing, pricing, and other incentives in the region to improve growth. The Latin America Caribbean region delivered strong constant currency revenue growth led by Chile and Mexico outbound, despite civil unrest in multiple South American countries. Revenue in the region declined two percent on a reported basis or increased six percent constant currency, while transactions grew four percent.
In the APAC region, revenue declined 10% on both a reported and constant currency basis. Revenue trends improved compared to last quarter's rate, partially due to pricing actions in certain markets. Transactions were down seven percent in the region, driven primarily by the Philippines domestic business, which has limited impact on profits. Digital money transfer revenues increased 25% on a constant currency basis in the quarter, including westernunion.com and third-party white label services. westernunion.com revenue grew 17% or 18% constant currency. wu.com now represents 15% of total C2C revenue in the quarter. Cross-border westernunion.com revenue increased approximately 26%, which was partially offset by declines in domestic money transfer. Business solutions revenue was flat on a reported basis or increased one percent constant currency and represented seven percent of company revenues in the quarter.
Constant currency revenue growth was driven by strong performance in Europe as well as strong growth in the education and financial institution verticals, which were offset by slower growth in hedging services. Other revenues, which consist primarily of our retail bill payments businesses in the U.S. and Argentina, decreased 52% in the quarter, which reflects the impact of the Speedpay and Paymap divestitures in May. The Pago Fácil walk-in business in Argentina posted good increases in transactions and local currency revenue growth. Other revenues represented seven percent of total company revenues in the quarter. Turning to margins and profitability, we will focus on consolidated margins as segment margins are not comparable with the prior year period due to reallocation of corporate costs following the divestiture of the Speedpay business. We are also providing adjusted metrics to exclude restructuring expenses, merger and acquisition costs, and related tax effects.
The consolidated GAAP operating margin was 17.3% in the quarter, compared to 19.3% in the prior year period. The decline was primarily due to higher marketing investment compared to the prior year period, the impact of restructuring expenses in the current quarter, and the divestiture of the Speedpay in May of 2019. We incurred $17 million of restructuring expense in the fourth quarter and $115 million for the full year, which was slightly higher than we expected in 2019 due to the timing of some items, but we continue to expect a total of approximately $150 million of restructuring expense, with the remainder to be incurred this year. Adjusted operating margin in the fourth quarter was 18.7% compared to 19.9% in the prior year period, with the decrease primarily due to higher marketing investment and the Speedpay divestiture.
Speedpay contributed about 60 basis points to last year's fourth quarter margin, while foreign exchange hedges provided a benefit of $7 million in the current quarter and a benefit of $4 million in the prior year period. The GAAP effective tax rate was 31.4% in the quarter compared to nine point eight percent in the prior year period, while the adjusted tax rate of 24.5% compared to six point eight percent in the prior year period. The increase in the GAAP and adjusted tax rates was primarily due to certain discrete benefits in the prior year period. While we expected the fourth quarter to have the highest tax rate of the year, it was further increased by one-time settlements in certain geographies. The GAAP rate also included additional taxes associated with the May 2019 divestitures.
GAAP earnings per share in the quarter was $0.32 compared to $0.48 in the prior year period. Adjusted earnings per share in the quarter was $0.38 compared to $0.51 in the prior year. The year-over-year decrease in both GAAP and adjusted EPS was primarily due to a higher effective tax rate, the divestitures, and higher marketing investment, partially offset by fewer shares outstanding. Turning to our cash flow and balance sheet, GAAP cash flow from operating activities was $915 million for the full year, which exceeded our outlook primarily due to favorable working capital items. Adjusted cash flow from operating activities was $1.1 billion in 2019. Capital expenditures were approximately $34 million in the quarter and $128 million for the full year. At the end of the year, we had cash of $1.5 billion and debt of $3.2 billion.
During the fourth quarter, we issued $500 million in two point eight five percent notes. We redeemed $325 million in notes due this year and reduced commercial paper. We returned $149 million to shareholders in the fourth quarter, including $84 million in dividends and $65 million of share repurchases, which represented approximately 2.5 million shares. The outstanding share count at quarter end was 418 million shares, and we had $1 billion remaining under our share repurchase authorization, which expires December 2021. As Hikmet noted, we're off to a good start to deliver on our strategic initiatives and restructuring plans, which is reflected in our strong operating margin and EPS growth outlook for 2020. Our outlook assumes no material change from current macroeconomic conditions. We expect GAAP revenues for the full year to be a flat to low single-digit decline, primarily due to the divestiture of Speedpay in May 2019.
On an adjusted constant currency basis, we expect low double-digit revenue growth this year, which excludes the Speedpay revenues and any benefit related to Argentina inflation. Operating margin on a GAAP basis is expected to be approximately 20%, while adjusted operating margin is expected to be approximately 21% as we continue to focus on generating efficiencies and we will begin to benefit from restructuring savings weighted toward the second half. We continue to expect to realize approximately $50 million of annual savings from restructuring in 2020, increasing to $100 million in 2021. In addition to this, we expect to realize other efficiency savings of $50 million by 2022 for a total of $150 million of annual savings in 2022. We expect the GAAP and adjusted effective tax rate to be in the mid-teens range this year.
GAAP EPS for the year is expected to be in a range of $1.87 to $1.97, while adjusted earnings per share is expected to be in a range of $1.95 to $2.05, which represents growth in the teens. Cash flow from operating activities is expected to be approximately $900 million, while adjusted cash flow from operating activities is expected to be approximately $1 billion. We expect to spend approximately $500 million on share repurchases for the full year. In summary, we delivered our full-year adjusted financial outlook in 2019. We made good progress on our restructuring activities and our new global strategy designed to drive profitability, efficiency and long-term growth. We generated strong cash flow and continue to return significant funds to shareholders.
We look forward to delivering on our strategy and our long-term financial targets of operating margin of approximately 23% in 2022 and a low double-digit earnings per share CAGR for the three years ending 2022 off of adjusted 2019 EPS. Thanks for joining the call today, and operator, we are now ready to take your questions.
We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Bryan Keane of Deutsche Bank. Please go ahead.
Hey, guys. This is Korey Marcello on for Bryan Keane.
I wanted to ask, I guess, first on the guidance. I know the three-year outlook is calling for two, three percent growth in consumer, but any color just for next year in terms of how you think Business Solutions and maybe other revenue will shape up? I guess in particular, you're going to have some lapping impacts from the divestiture, so I didn't know if you had any comments on sort of the quarterly cadence of revenue growth for the year.
Well, I can jump in, but let me start. Look, in the fundamentals, nothing has changed. We really assume that our business will perform, especially our digital expansion will perform. The digital expansion for us is a branded or white labeling. We're going to go, and you saw the recent numbers on our growth numbers are quite impressive, and that's from a different base than the competitors have, right? We have been investing here for a long time and growing very strong in digital expansion. That continued to go. The other part is that dropping money on real time on accounts, that will continue to go. Offering retail cash pay up and dropping money in real time is a huge competitive advantage within our capabilities. Look, we also started to drop money for businesses, right? I mean, we are collecting for Amazon from consumer in different countries, businesses.
We are doing transactions for third parties. Our business-to-business has had a good year growing by four percent. Generally, I would say that nothing has changed from our Investor Day. We are in a good momentum. We like our business. We like how we are performing, especially also our transformational activities and our efficiency activities are very promising. We are still in target with our 2022 goals. Anyone you want to add something?
I think you covered it.
Yeah.
I think we're good.
Okay, great. I guess just as a follow-up, you mentioned obviously Amazon and third parties there. I guess, can you give maybe a broader update on what the pipeline looks like for those third parties, and in particular, maybe the Amazon partnership, any update there in terms of plans for the year and market go live? Is there anything kind of baked into the guidance from some of this stuff that you've called out as more longer term, I guess, for next year? Thanks.
Yeah, I think as you said, it's a longer term. We started in a very good, strong digital growth. Definitely our partnership helps on our strong growth, right? Look, we go to markets. We are talking and in some countries, we're offering our wu.com business, in some countries on our digital white-labeling part, depending on our partner, depending on the legal environment, depending on the consumer relationship. The good news is that the partners are choosing our capabilities to move cross-border, cross-currency money. That capability, having two countries and capable operating in 200 countries is unique. It's still small, but growing very strong and has good potential. We will definitely update with additional partners. I mean, we recently signed three big postal offices like the La Poste, Post Office, and the Poste Italiane.
Poste Italiane is, for instance, having access to seven million consumers, Italian consumers, with their mobile phones, right? They do transaction cross-border by using our platform. It's quite impressive, and we drop money in real time for them. That's going to continue. It depends really on the partnership how they choose. If they choose Western Union brand or being a partner like Amazon, which Amazon uses their own codes. We are for them a service provider to collect money for their online services.
All right. Thanks, guys.
Thanks, Korey.
Thank you.
Our next question comes from Darrin Peller of Wolfe Research. Please go ahead.
Hey, guys. This is Andrew on behalf of Darrin.
Hi, Andrew.
Into North America. Hey, how's it going, Raj? I want to drill into North America for a little bit. It looks like the delta between transactions and revenues was relatively stable over the last couple of quarters and widened a little bit this quarter. I was wondering, is there any impact of the digital transactions in that number? Is that largely all domestic? If you can provide any other additional color on what you saw on domestic in the quarter and further into the outlook for 2020.
North America, I would say that one of the key driver was really declines in our domestic money transfer transactions in the U.S. We also have a very small Philippines intra business that has a heavy number of transactions, which was also declining. That has an impact on overall mix. The U.S. to Mexico market also was just softer from a market standpoint, although we continue to gain share there. We also put new principal limits in place for U.S. to Cuba. Some of these things had an impact in the quarter. Overall, I would say the digital part of the business, if you look at the cross-border part of wu.com again, which North America is a contributor there, obviously, that grew at 26%. The digital part continues to do well.
The domestic part of digital certainly was a little bit worse in the quarter than it was in the previous quarter.
Then that new metric, the digital revenues that you called out, how should we think about that mix across all the different regions that you have? I mean, I think it's the first time that you've really been able to separate them like that. Maybe just letting us get a better sense of how we should think about that across segments. Thanks.
I mean, right now the digital, which grew 25% of the quarter, includes wu.com, as well as the digital white label partners, and we only have a handful of those right now, and the two primary ones are Saudi Telecom in Saudi Arabia and Sberbank in Russia. Those are the two primary ones that are driving a lot of the additional growth. There's not much to cut in terms of where it is globally. It's in those two regions, if you will, it's in the Middle East as well as in Europe. Certainly, we want to sign more partners and more opportunities. We really look at the total digital as being one type of offering with branded and non-branded offerings, and they're both leveraging our platform capabilities, right.
They basically use our same platform. You go to market, and it's the partner's decision if they use their brand. In that case, in Saudi Arabia, for Saudi Telecom did use it, but it's the westernunion.com platform and our platform, Western Union platform, and our network. We drop money over our network. It's really a digital transaction with different brand.
All right, thanks, guys.
Sure.
Our next question comes from Ramsey El-Assal of Barclays. Please go ahead.
Hey, guys. This is actually Benjamin Budish on for Ramzi. I wanted to follow up on the white label wallets you guys talked about and just looking at the growth in Europe versus the Middle East. I know you called out some one-time factors impacting the Middle East growth, but is there anything to read through there, like maybe the growth in transactions at Sberbank are growing better than those STC, or is that really all related to those one-time factors that you called out?
I would say most of it is related to the one-time factors, and we'll see how long the Lebanon civil unrest we called out. There's some in Syria. Obviously the India tax is also the other factor, which the issue was reversed. The tax came into play late in the third quarter, but then it was reversed in the fourth quarter. We did have some customer attrition, and that's what we're working through right now. We've assumed that in the first part of this year, we'll see some of that, but we should be able to work through that as the months come along here. It's really related to those factors rather than any shift in mix, if you will.
Okay. Just following up again on the white labels. Would you say that performance has been in line with expectations? We got a little hint of it back at the Investor Day, and it looked like things were going quite nicely. Is there any change to that, or does it seem like things are moving along according to plan?
Yeah, I would say things are moving along very much according to plan. They're doing quite well, and we're very excited about them. We want to continue to add more and more partners to the mix.
Okay, great. Thanks for taking my questions.
Thank you.
Our next question comes from Vasundhara Govil of KBW. Please go ahead.
Hi. Thanks for taking my question. I guess the first one on the pricing front, it seems like, Hikmet, that's been a tailwind for a couple of quarters now. Can you talk about whether you're starting to see an impact from your Dynamic Pricing Initiative, or it's just the underlying trends are better? If you could also comment on what's enabling the stability in the pricing environment, because it doesn't seem like the competitive environment has necessarily abated.
Well, pricing environment, obviously, as we said earlier, partly impacted by mix, partly with the strong pricing environment. We feel comfortable with our dynamic pricing activities. As you know, we adjust our pricing corridor by corridor, even zip code by zip code, customer behavior by customer behavior. This effort started, and we start in few corridors, and we will expand that globally. That's something that we are very excited about, that you can compare like a big airliner. You fly one direction, you have different customers with different needs, with different price payments. That's going to happen, and that's what we are aiming to, and we started in some corridors, and we see good return on that. That's just the beginning of the story, though, and we are quite excited about that.
Great, thanks. Just a quick follow-up on the transaction growth trends, Raj. I think you mentioned on a previous question that you're assuming that that will continue to be weak in the first half. Is that true for just the India piece or all the various one-timers that you saw this quarter? Just to confirm, does coronavirus have any impact on your business, positive or negative?
In terms of the one-time items that we called out for Q4, obviously the ones that are under our control, we're actioning those. There are some things that are more country-specific issues, civil unrest, it's not really under our control. We've assumed that some of these things will continue for the first part of this year. We don't expect them to continue for the entire year. Certainly, we'll update you as we see more. From a coronavirus standpoint, we have not assumed any material impact for coronavirus. China, for us, is about two percent of our total revenues, and it's mostly inbound in nature. Obviously, the conditions there are evolving every single day, we need to see how that plays out.
Yeah, on China, first of all, we support our employees and look after them, and it's very important. Also agent locations. Most of the agent locations are active, and as you said, it's only two percent of our business. At the same time, I want to mention that also we can drop money in minutes on an account in China. If people don't feel to go to the location and have a physical payout, they could also do it online, and this is one of the growing parts of our business. We do really don't see big impact from coronavirus yet. Now, I can't judge it generally what will have that on to general global economy, but at specific areas, we don't see big impact on our business.
That's very helpful. Thank you very much.
Our next question comes from Andrew Jeffrey of SunTrust. Please go ahead.
Hi. Good afternoon. Appreciate you guys taking the question.
Agreed.
Conceptually, I'm just wondering how you're thinking about the business, Raj. I think you made a comment about the domestic business increasingly being a source of free cash and presumably return of capital. It would appear that strictly looking at wu.com, it's 100% of your C2C growth today. Should we think about that as sort of the future and the balance of the business as really being a cash cow, for lack of a better term, and fueling investments to support digital and returning capital to shareholders? Is that a reasonable framework?
Yeah, I think, Andrew, as we laid out at Investor Day, we said that our assumption was for two to three percent overall growth over the next three years, and that has not changed.
The composition of that was a flattish type retail business. Obviously, we'd like to get a little bit of growth out of it, but we do believe that can be the case. We expected digital to grow in the 20% range and off of a base of $600 million last year, that's quite a bit of contribution. We also expected and continue to expect that the B2B business will grow in the mid-single digit range. Those are the components we're thinking about. Obviously, we want to drive to more than just two to three percent growth. That's not satisfactory, and that's where really our platform strategy comes into play and signing more and more partners as we move along.
Just last point on the domestic business, it was about six percent of our total revenues last year, so it's becoming a smaller and smaller piece overall of the company. That's probably a trend we're going to see for a little while. That's what we've assumed in our outlook for this year as well.
Okay. Still hoping that that retail business, I guess, can turn the corner for you.
Yeah. Go ahead.
Oh, yeah. We assume a flat business. Nobody has the strength of retail compared with our global coverage. Most importantly, you connect digital with retail, that we can pay out in different economical environments. We serve different customer segments on the send side. We serve different customer segments on the receive side. Combining that, it's a big advantage for us that drives the growth of digital, paying out in cash or paying out in an account or paying out in a wallet, and that in real time. It's huge.
That's definitely going to continue happening in the retail business.
I think as you saw at Investor Day, it continues to be the case, the opportunity on the retail side is to drive more dynamic pricing capabilities. Time of day of week, location density, those kinds of things give us confidence that we can keep the retail business in the flattish type range because there's more opportunity there that we haven't fully maximized yet.
Okay. I apologize if I missed it, but it looks like yields on wu.com improved again this quarter. What's driving that?
Yeah, there was certainly some mix impact from the domestic business and things because we're running the domestic parts of our business for cash, if you will. That certainly has a positive mix on the revenue side. There was also some pricing that we did. As we mentioned, net pricing was beneficial, net of the mix in the quarter. We feel good about where the overall digital business is. We had 25% revenue growth in digital, but over 30% transaction growth in that digital business. We're doing quite well overall on the digital side.
That's pricing specifically at wu.com or across?
On the branded wu.com offering, yes.
Okay. All right. Thank you.
Sure.
Our next question comes from Timothy Chiodo of Credit Suisse. Please go ahead.
Good afternoon. Thanks for taking my question. I wanted to talk a little bit about the unit economics of some of the digital white labeling programs. I know we've talked about in the past that the revenue per transaction is obviously a little bit lower, but maybe you could talk about the absolute EBIT dollars per transaction and how that might compare to a traditional Western Union transaction.
Yeah. First of all, I would say it's still early stages on the white label partners. We're going to continue to learn on what kind of economics they can provide. You're absolutely right. You typically will have a lower starting point from a revenue per transaction standpoint. We also don't have much cost in that transaction either, as we do in our branded offerings. In a wu.com transaction, we're investing heavily in marketing to acquire customers. We also have fraud losses and other things that we're paying for. In a white label transaction, we are being delivered a customer who wants to do a transaction with us and has good funds. We don't spend the marketing dollars there, and we really have the processing cost. The margins in the white label offerings can be quite high, actually.
We're going to learn more as we launch more of these partners, but based on our early experience, it can be a very profitable business. Last thing I would say is that we see it largely as an incremental business, so incremental revenues and incremental profits.
Right on. Thank you. I'm trying to get a little bit more at the absolute dollar. I understand that the revenue is lower and the margin percentage could be higher, but could the absolute dollar actually be similar?
It depends. I can tell you one of the examples we have that's currently going on is very profitable. The other one is not as profitable, but we're getting, again, incremental revenues and incremental profits. Obviously, it's important on how much money we're making per transaction, but as long as we're getting incremental business for the company and it's within our overall framework, that's the most important thing for us. We'll learn more over time, and we wouldn't be doing this if it wasn't profitable for us.
Both are profitable, it depends on the partner. Also the new additions of the post offices will be very profitable, but it depends on the partner and the geography and which corridor you are placing that. It's like started our westernunion.com business. As we start to report, it was only one percent of our revenue. Now it's about 15% of our consumer revenue. It's a huge part of that. Same approach we think also could be done by our digital business, like combining wu.com and digital business will be a big part of the future of the company and will be very profitable.
Great. Thanks a lot. That is really helpful. I appreciate it.
Sure, no problem.
Andrea, do we have anyone else in the queue?
There's no one in the queue at this time, but if anyone else would like to ask a question, they may press star then one.
Okay, great. Well, thank you everyone for joining. We'll end it here. Thanks.
Thank you.
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