Good day, welcome to The Western Union Company first quarter 2021 earnings release 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. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Brendan Metrano, Vice President of Investor Relations. Please go ahead.
Thank you. On today's call, we will discuss the company's first quarter 2021 results, our financial outlook for 2021, and we'll take questions. The slides for the company 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 2020 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 types of expense that the company has previously incurred and can reasonably expect to occur in the future. All statements made by Western Union officers on this call are the property of The Western Union Company and subject to copyright protection. Other than the replay noted in our press release, Western Union has not authorized and disclaims responsibility for any recording, replay, or distribution of any transcription of this call. I will now turn the call over to our CEO, Hikmet Ersek.
Thank you, Brendan, and thank you all for joining us this afternoon. As noted in today's press release, our business is off to a good start in what we believe is a very important year for Western Union. We weathered COVID-19 better than many companies in 2020 owing to our resilient fundamentals and the foresight behind our leading digital business that had us ready for accelerated demand for digital services. Before I give you an update about the encouraging first quarter results and share my thoughts about the rest of the year, I would like to take a moment and mention that although we do see some modest economic improvements, and there are signs of some COVID-19 recovery like in the U.S., parts of Europe, and parts of Asia Pacific due to progress with vaccinations.
At the same time, I am saddened by the heartbreaking current situation in countries like India, Brazil, and many others. Our thoughts are with all of the people who are currently navigating this challenging situation. The recent outbreaks in many countries show us that as a global community, we still have work to do in the fight against the virus. At the same time, I am hopeful, and I know that all my colleagues and all our partners in more than 200 countries will do their best to recover from the virus as soon as possible. Back to our business. The conditions were fairly stable in the first quarter. I am pleased that trends for our business improved over the quarter and held up well in April, giving us confidence to push forward with an ambitious agenda and reaffirm 2021 financial targets on an adjusted basis.
Raj will discuss our outlook in more detail in a few minutes. With that, let's review business highlights for the quarter. Starting with the big picture, our cross-border consumer-to-consumer or C2C business grew principal 28%, which was the highest quarterly growth in years and the third consecutive quarter with growth over 20%. This really shows the momentum we are seeing today, especially when compared to forecasts from third parties projecting modest growth or even declines in principal for 2021. Total company revenue grew 2% on a constant currency basis, around a 300 basis points increase from declines in the third and fourth quarter of last year. C2C revenues and transactions grew 4% and 9% respectively, and both digital and retail revenue trends improved sequentially. Digital performed exceptionally well again.
Revenues were up from the fourth quarter and grew 45% year-over-year to over $240 million, putting us on target to exceed $1 billion in 2021. Digital comprised 34% of transactions and 23% of revenues for the C2C segment and was a key source of new customers and incremental profit. WU.com delivered impressive results and showed the potential we see as a foundation for a consumer ecosystem. This is the fourth consecutive quarter of transaction growth of 50% or more and average monthly active users growth of over 40%. WU.com led money transfer peers in mobile app downloads by a wide margin, improved principal 78% of an already large base, which we believe is well ahead of the market. Our customer engagement efforts also appear to be paying off with favorable trends in retention, transaction per customer, and principal per customer.
Digital partnership revenue more than doubled year-over-year, and it has exceeded our expectation over the past 18 months since we announced it in late 2019. We continue to have more encouraging developments in the pipeline. Retail trends improved sequentially from the fourth quarter to the first quarter, despite the effects of additional waves of COVID-19. While the business is not back to pre-pandemic levels yet, it has demonstrated resilience, and we expect continued improvement through the rest of the year, assuming the pandemic and global economy doesn't worsen. Our Business Solutions trends also improved. We made progress on key initiatives, including launching our payment solutions in Spain and implementing technology upgrades that will allow us to add differentiated solutions and capabilities. We are optimistic that the business will continue to rebound over the course of the year.
Shifting to an update on operating and strategic objectives during this quarter. Starting with WU.com. We continue to invest in consumer acquisition and marketing, which drove 46% growth in average monthly active users for the first quarter. On the branding side, we launched one of our highest-rated television campaigns in recent years, Send More Than Money, which featured WU.com. We also made progress on a number of product initiatives to improve our customer experience, faster registration, better webpage performance, and enhanced visibility into transaction status. We achieved an important platform milestone by completing a major phase of our multi-year settlement transformation project. We also advanced a number of initiatives that will make us more nimble and efficient, like cloud migration and adding artificial intelligence and machine learning into processes to reduce project runtimes and enhance analytics. Moving on to our global network.
The team has done a great job optimizing commission costs while still enhancing the quality of our global payments distribution capabilities. During the quarter, we renewed agreements with 34 existing agents and added 41 new agents with favorable terms. Over 50% of our global account payout transaction volume was delivered real time. Our launch with Walmart is off to a good start, and we look forward to getting all 4,700 U.S. locations up and running in the second quarter. To wrap up the first quarter discussion, despite ongoing challenges from the pandemic, we are off to an encouraging start, with financial and operating performance on course with our expectations for 2021.
Given the strong customer trends we have seen over the last year in our C2C business, including almost nine million WU.com annual active users in 2020, the agenda for the rest of 2021 is largely centered around enhancing the customer experience. Convenience, reliability, and speed are fundamental for a good customer experience in payments, which makes a high-quality network important. On the digital side, we can reach billions of accounts today, but we are expanding access to even more accounts with new partnerships. Speed is increasingly valued by customers, and we already have one of the broadest real-time cross-border payment networks in the industry. The focus this year is making it more robust by adding additional direct third-party relationships and multiple partners in markets. Our retail distribution will continue to benefit from ongoing agent optimization, upgrading the caliber of agents, and filling in gaps in distribution.
Platform initiatives for 2021 include upgrading and modernizing technology, incorporating cutting-edge solutions, and bolstering our executive talent. This will enhance customer experience in a number of ways, such as better processing speed and enabling more innovation. Ultimately, we are working towards building a best-in-class tech stack that can support a range of cross-border use cases, including C2C, C2B, B2C, and B2B, and serve as a foundation for ecosystems. I'm really excited about this slate of product initiatives this year that can be impactful for customer experience. A few examples include improving the functionality of our mobile app, advancing dynamic pricing, revamping our customer loyalty program, and the pilot in Europe with our Western Union International Bank later this year, extending our offerings to a wider set of financial services.
Given the customer-centric agenda we have for 2021, I think it makes sense to discuss why we are so optimistic about the long-term prospects of serving our core customer segment, the global migrant community. Let me start by saying we are extremely proud and privileged to serve the global migrant community, and we are honored that they trust Western Union with one of the most important financial aspects of their lives, supporting loved ones in home countries. As highlighted in our ESG reports for 2018, 2019, and our 2020 report coming in June, we are proud of the contribution our business makes around the world by promoting economic growth and prosperity for the people we serve. Our purpose underpins our market position and strategy, and we believe our business offers strong potential value creation for all stakeholders.
First, the migrant and their loved ones is a large customer segment for Western Union. According to the United Nations, there are more than 270 million migrant residents globally, and many of them send remittances. Factoring in remittance recipients in home country who also use our services and desire more options for financial services could more than double the potential customer base to over half a billion people. Second, migrants are a growing, hardworking and upwardly mobile group. They are expected to drive a significant share of future population growth in higher income countries and have above average labor participation rates, higher rates of entrepreneurship, and contribute significantly to innovation. The third and final point, migrants have significant spending power. According to a 2019 New American Economy Study, migrants represented $1.3 trillion of spending power in the U.S. alone, and obviously globally, this amount is even higher.
To summarize, we believe migrants and their families and loved ones are special group of people that have an important role in societies and economies around the world. Serving our customers' needs is a good business that offers Western Union organic growth and opportunity to expand into new services. On top of this, the cross-border expertise and capabilities we gain through serving our core customer segments enables us to offer our cross-border platform for financial institutions and other third parties, extending our market opportunity beyond our own Western Union consumer services. In closing, I'm pleased with the direction of our business. Based on what we see internally and in the market, we are confident in the strategy and plan for the year, and we are off to a good start. With that, I'll turn the call over to Raj.
Thank you, Hikmet, and good afternoon, everyone. Please note that my comments on growth refer to first quarter results compared to the prior year period, unless otherwise noted. Moving to first quarter results. Revenue of $1.2 billion increased 2% on both a reported and constant currency basis. Currency translation, net of the impact from hedges, had a limited impact on first quarter revenues. In the C2C segment, revenue increased 4% on a reported basis or 2% constant currency, with transaction growth partially offset by mix. C2C transactions grew 9% for the quarter, led by 77% transaction growth in digital money transfer. Retail money transfer transactions were down in the quarter, but the business continued to move in the right direction, with trends improving sequentially from the fourth quarter.
The mix impact from the high growth of digital white label partnerships and account-to-account digital transactions, both lower revenue per transaction or RPT, continued to contribute to a spread between C2C transaction and revenue growth in the quarter. We do expect this gap to moderate over the next three quarters. Total C2C cross-border principal increased 28% on a reported basis or 26% constant currency, driven by growth in digital money transfer and retail. Total C2C principal per transaction or PPT was up 15% or 12% constant currency, led by retail and WU.com. Evolving business mix coupled with changes in consumer behavior more widely contributed to a higher PPT. Digital money transfer revenues, which include WU.com and digital partnerships, increased 45% on a reported basis or 44% constant currency.
Similar to the broader C2C business, the mix impact from digital white label partnerships and account-to-account digital transactions contributed to a spread between transaction and revenue growth. From our vantage point, the pricing environment in the digital market remains constructive. Hikmet mentioned, WU.com had another very strong quarter. Revenue grew 38% or 37% constant currency on transaction growth of 55%. Cross-border revenue was up 49% in the quarter. PPT trends were impressive and we saw continued double-digit growth. Digital partnerships transactions and revenues more than doubled in the quarter. As you may recall, the business experienced a step-up in transactions in the second quarter of 2020 with the initial global wave of COVID-19, then another step-up for the second half of 2020. This strong prior year growth is expected to cause some moderation in growth over the rest of 2021. Moving to the regional results.
North America revenue was flat on a reported basis or increased 1% constant currency on transaction growth of 1%. The increase in constant currency revenue and transaction growth was driven by U.S. outbound, partially offset by declines in U.S. domestic money transfer and Cuba, where current U.S. regulations limit our ability to operate. Revenue in the Europe and CIS region increased 8% on a reported basis or 4% constant currency on transaction growth of 28%. Constant currency revenue growth was led by France and Russia. Growth in Russia was driven by the incremental digital white label business, which continued to contribute to a spread between transaction and constant currency revenue growth. Revenue in the Middle East, Africa, and South Asia region increased 1% on a reported basis or was flat constant currency, while transactions grew 13%.
Qatar had solid constant currency revenue growth in the quarter while the United Arab Emirates continued to experience soft trends. Incremental digital white label business in Saudi Arabia was the primary driver of the spread between transaction growth and constant currency revenue growth. Revenue growth in the Latin America and Caribbean region continued to improve sequentially and was up 3% or 8% constant currency on transaction declines of 8%. Constant currency revenue growth was driven by a broad increase in principal across the region, with higher PPT driving the spread between constant currency revenue growth and transaction growth in the quarter. Revenue in the APAC region increased 9% on a reported basis or 3% constant currency led by strength in Australia. Transactions declined 2%, primarily driven by the Philippines domestic business, which has limited impact on revenue.
Business Solutions revenue decreased 2% on a reported basis or 8% constant currency as COVID-19 continued to impact certain verticals and hedging activity. However, revenue trends continue to improve sequentially and we expect will remain on an improving trajectory for the remainder of the year with a broader recovery in cross-border trade. The segment represented 8% of company revenues in the quarter. Other revenues represented 5% of total company revenues and declined 18% in the quarter. Other revenues primarily consist of retail bill payments in the U.S. and Argentina and retail 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, consolidated operating margin in the quarter was 19.2% compared to the prior year period margin of 19.6% on a GAAP basis and 20.5% on an adjusted basis, which excluded costs related to our restructuring program. The decrease in the operating margin primarily reflects how COVID-19 impacted the level and timing of certain expenses and investments in 2021 compared to 2020, including investments in strategic initiatives and marketing and compensation-related expenses, partially offset by changes in FX. Foreign exchange hedges had a negative impact of $4 million on operating profit in the quarter and a benefit of $10 million in the prior year period. Moving to segment margins, note that segment margins exclude last year's restructuring charges. C2C operating margin was 19.6% compared to 20.7% in the prior year period.
Given that our C2C segment comprises almost 90% of total company operating income, the decrease in operating margin was driven by the same factors that impacted total company margin. Business Solutions operating margin was 13.1% in the quarter compared to 14.1% in the prior year period. The decline in operating margin was primarily due to an increase in compensation-related expenses. Other operating margin was 22.6% compared to 26.1% in the prior year period, with the decline primarily due to lower revenue. The effective tax rate in the quarter was 10.4% compared to a 12.5% effective tax rate on both GAAP and adjusted basis in the prior year period. The decrease in the company's effective tax rate was due to changes in composition between higher tax and lower tax foreign earnings and an increase in discrete tax benefits.
Earnings per share or EPS was $0.44 compared to the prior year period GAAP EPS of $0.42 and adjusted EPS of $0.44. Year-over-year comparisons of EPS in the quarter reflect benefits of revenue growth, a lower effective tax rate, and share repurchases offset by increased investments in strategic initiatives and marketing and compensation-related expenses. Turning to our cash flow and balance sheet, cash flow from operating activities in the first quarter was $176 million. Capital expenditures in the quarter were approximately $97 million, driven by agent signing bonuses and should be in a normal range for the full year. At the end of the quarter, we had cash of $1.5 billion and debt of $3.2 billion. During the quarter, we took advantage of historically low interest rates to issue new notes.
Proceeds were used to pre-pay a portion of the term loan in the first quarter, and we repaid our notes due in 2022 in early April. We returned $172 million to shareholders in the first quarter, consisting of $97 million in dividends and $75 million in share repurchases. The outstanding share count at quarter end was 410 million shares, and we had $708 million remaining under our share repurchase authorization, which expires in December of this year. As Hikmet noted a few minutes ago, in today's earnings release, we updated our 2021 financial outlook, affirming expectations for revenue growth and operating margin and raising GAAP EPS. We are also on track to achieve our digital revenue target exceeding $1 billion. The increase in GAAP EPS reflects the sale of an investment, partially offset by expenses related to the early retirement of the company's notes due in 2022.
Both of these items will be reflected in second quarter results. Excluding the impact of these two items, the 2021 EPS outlook would be unchanged, which we have reflected with an adjusted EPS outlook. Note that our outlook assumes no material worsening in current global macroeconomic conditions or the COVID-19 pandemic. We expect full-year 2021 revenues will grow mid to high single- digits on a GAAP basis or mid single- digits on a constant currency basis, which also excludes the impact of Argentina inflation. Operating margin is expected to be approximately 21.5%, reflecting revenue growth and benefits from our three-year productivity program that we expect to generate approximately $150 million of annual savings by the end of 2022, partially offset by higher operating expenses and investments in strategic initiatives. We expect our effective tax rate will be in the mid-teens range on a GAAP and adjusted basis.
GAAP EPS for the year is now expected to be in a range of $2.06-$2.16, including approximately a $0.06 net benefit in other income on an investment sale and debt retirement expenses that occurred early in the second quarter of 2021. Adjusted EPS, which excludes those items, is expected to be in a range of $2.00-$2.10. Given the variability that COVID-19 caused on 2020 quarterly results, I will provide some context for how we think results may progress over the remainder of the year. Note that our underlying assumptions include no material worsening in the effects of the pandemic and moderate improvement in global macro environment as the quarters progress. For the second quarter, we expect to see the strongest year-over-year growth rate as we cycle over the largest quarterly decline of the prior year.
For the third and fourth quarter of 2021, given the stability we had in the back half of last year, we expect general stability and trends and similar year-over-year growth rates. Keep in mind that as a result of COVID-19, our digital business delivered exceptional growth from the second quarter onward in 2020. Growth rates this year should moderate somewhat for the remainder of 2021. Although we still expect to generate more than $1 billion in digital money transfer revenues this year. Our retail business experienced a significant decline in the second quarter of 2020, and while it began to come back quickly, we expect recovery will occur gradually. As a result, we expect retail will generate growth in 2021. The Business Solutions segment and other revenues were adversely impacted by COVID-19 in 2020. We expect that those businesses will continue to rebound this year.
Moving on to margin. Based on our current view, we expect that second quarter margin will be below the full-year margin outlook, while the back half of the year will be above the full-year margin outlook. To wrap up, we are off to a solid start for the year, optimistic that the macro environment will remain constructive, confident in our competitive position and underlying fundamentals, and we are enthusiastic that our strategic agenda for the year will position us to realize the significant opportunities we see for our business over the next few years and beyond. Thank you for joining our call today, and operator, we are now ready to take questions.
Thank you. We'll now begin the question and answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. We do ask that you limit yourself to a single question at a time. Today's first question comes from Jason Kupferberg with Bank of America. Please go ahead.
Thanks. Good afternoon, guys. Nice job here on the quarter. That's what I wanted to start with here. Your adjusted constant currency revenue growth came in at up 2%. I think you had been expecting it to be more in line with Q4, which was down 1%. I wanted to get a sense of whether the upside surprise here was primarily the digital side of C2C, or were there other areas of the business that also outperformed your expectations?
I think it's a good question, Jason. Hi, how are you doing?
Hi.
I believe that all over the company, we see really the business coming back. The digital business had been extraordinary again, delivering. If you think that the growth rates coming from a huge base already compared with the competition, I think we are targeting $1 billion+ for year-end, we are well on the way. The Westernunion.com business has been performing very well, we see also a lot of customer acquisition on Westernunion.com business, new customers, that has been doing well. The most important one, a big part of our business, retail business, is recovering, right? This added to our 2% growth. As we see, look, the COVID-19 is not over. It's still there, we do see some recoveries, that helps our business. People are using more digital, coming back to our retail business.
Just a quick follow-up, maybe. The WU.com constant currency revenue growth accelerated to 37% from 26% last quarter. It looks like the transaction growth there was pretty stable, so just wondering if there were some mix factors that worked in your favor during the first quarter in WU.com? Thanks.
Yeah. Hi, Jason. Not really. We continued to get growth throughout the .com business. I would say that the yields on .com were relatively stable from Q4 to Q1. The transaction growth stayed quite stable to Q4, as you said, that just provided the overall lift in the business. The RPT was quite stable as well. I think it's really playing out according to our expectations, and we see good things for the entire digital business this year.
Okay. Thank you.
Our next question today comes from Darrin Peller with Wolfe Research. Go ahead.
Hey, guys. Thanks. If you can give us a little more detail on the trends, call it second half March exiting the quarter into April, specifically on the digital side, because I think folks are looking into how sustainable that growth rate will be as we start to lap the big growth you had in digital sometime last year. The second part of this question is, also on the retail growth, you're saying it's going to grow. When we compare retail to 2019, do you actually anticipate it getting back to those levels again? If we can get that on top of digital strength, it'd be good to see. Thanks.
Hi, Darrin. Let me try to address both questions. The first one, as we had mentioned when we gave the outlook initially earlier this year, digital is going to moderate in second, third, and fourth quarter. That's what we expect to happen because we got the largest growth or the strongest growth beginning in the second quarter of last year. That's what you should expect. We're still going to get to above $1 billion in total digital revenue. That should give you a sense of the overall growth potential in that business. With respect to retail, we're probably not going to get back to 2019 levels this year, but it really depends on what happens.
Certainly, there'll be some rollover impact, but we have other things that are coming into the business, like a Walmart and other initiatives in the second half of the year. Those will also play a big part in where the retail business goes.
Okay. I guess my follow-up is really around the digital transformation you have in the company. Hikmet, there's been a lot of discussion over taking some of this active user growth on Westernunion.com and trying to monetize it more. I think you alluded to some of the profile of the underbanked or migrant customer base being pretty strong. What kind of progression can we expect to see from you guys around that throughout this year? Thanks again.
Yeah. Great question. Obviously, via westernunion.com, we have direct access to customers. It's really where we communicate directly with our customers. We know that Westernunion.com customers are more loyal to Western Union. They use more often, we can communicate directly with them. What we do, we are in 75 countries, these customers are migrant customers. For instance, U.K. to Albanian customers, we speak in Albanian. In Italy to Romanian customers, we speak in Romanian, right? They trust us. They also tell us that they really want new products besides Western Union services. The financial services will be the focus area, which we are looking at that. We started test this year in Europe with our Western Union International Bank license, we're going to learn more on that. Long term, I really see a big opportunity here.
We have about 9 million customers with westernunion.com, and it's growing. You just saw the numbers coming in, the new customer acquisition. This is a big opportunity besides having our core business, which is the money transfer business, really adding additional services long term.
Understood. Thanks, guys.
Thanks.
Our next question today comes from Tien-tsin Huang with JP Morgan. Please go ahead.
Thanks. Good afternoon. I appreciate the disclosure on the digitals. I'm curious about the 9 million active user figure. If I remember, and I could be wrong, I think at some point you disclosed 150 million active customers in your traditional retail business. I'm curious how you think about that 9 million today and where it can go, how much of it is new, anything that you've learned in terms of customer acquisition cost, things like that. Thank you.
Sure. Hi, Tien-tsin. Great question. You asked me that earlier also. I remember we have about 150 million customers globally. More than half of them are senders, and half of them are kind of receivers, right? Our focus, obviously, with the financial services additional customer segment at westernunion.com is obviously from the send side in the beginning. Also on the receive side, we know that the customers want to get more services. Is it in Romania, is it in Poland, or is it in Morocco? They tell us we did some customer service here. There are two ways to go. First of all, we are going directly with our Westernunion.com business, which we are the agent directly to our customers acquiring them, and we know their usage is more often with that.
The second thing is that we do have some locations we have higher traffic, kind of focus on the ethnic groups saying that, okay, they would like to send money from France to Morocco. They would like to send money from Germany to Turkey. These kind of customers, we have dedicated locations, and these are also repeat customers, and we are also acquiring them and building to our consumer ecosystem because they tell us also they would like to have additional services. One example is our test with the insurance services with AXA. As you know, AXA is one of the largest insurance companies worldwide. With them, we are doing a test in France and really expanding our test to the next stages, saying that our customers want additional services. I see long term, really a revenue opportunity here for the company.
Okay. Great to hear. See, I'm listening to our conversation segment. I'm glad that you're able to share that. My quick follow-up, if you don't mind, just on the India front. That's really great that you guys are doing a lot of relief effort there, by the way. Thanks for that. I'm curious if you could see any interesting trends there, because I know India is an important receive nation for you.
Yeah. Obviously India is very important for us. First of all, as I said in my remarks, we have millions of customers there. They make the change there when they receive money. We have thousands of employees there. They are going through that very difficult times, but not only in India, obviously all over the world. Private there, also family there. As you can imagine, we are taking care, looking at that daily. From the business side, the locations are still open, Tien-tsin Huang. They are seen as essential services is at our post office locations, bank locations. As you know, we have huge networks there, but we also have dedicated retail locations there. They're open. The biggest growth is coming from account payouts. We have a huge account payout network in India.
You can send directly money to an account in real time, and many people are using it. It's basically our fastest-growing, on absolute numbers, it's not that big, but it's the fastest-growing part of our business, paying out in accounts. That helps people in India a lot because believe me, the situation in India is not easy. The people are really getting that. We see also the send side, all our people around the world sending to and thinking about their relatives and sending money, and the money is used for essential services, for health services and other things. Thank you for asking that question.
Thank you.
Thank you. Our next question today comes from Rayna Kumar with Evercore. Please go ahead.
Good evening, Hikmet and Raj. As you mentioned in your commentary, there was a spread between your C2C revenue and your transaction, which was largely driven by the white label partnerships. Could you talk specifically about if there were any pricing changes, positive or negative, that may have impacted that spread? I'll ask my follow-up upfront. You've had dynamic pricing initiatives in place for quite a while now. Can you talk about how that's performed versus your expectations? Thank you.
Yeah, Rayna, let me take the first part. On the spread, what you're seeing is really the year-over-year changes that are causing the spread. From a pricing standpoint, the yields have been relatively stable since the third quarter of last year, and as well as the digital white label mix, that's also having an impact. As I mentioned in my comments, the spread between revenues and transactions is going to narrow the next three quarters, and you'll see that happening. There are reasons why. We will not have as much of an incremental number of transactions from digital white label. Pricing is relatively stable for WU.com, and then retail is having a significant rebound this year, and you'll see that starting in the second quarter. The spread is going to narrow quite a bit.
In terms of dynamic pricing, we have a number of things that we've been putting in place. We are doing a lot of testing all the time, looking at various technology improvements that we made.
Yeah. We just had another business review on that, Rayna. It does have a big impact to our growth and our customer acquisition, and still keeping the revenues in a very good growth area. We do extend that. We started with Westernunion.com. Now we also do it in retail business, especially in the dedicated locations. We see the return there. This dynamic pricing will be really maybe one of the best worldwide in the future because we hired also really great people who are experts. That was my comment also, executive hiring on the tech part. We hired great people. They really show us how that works. I'm very encouraged by dynamic pricing activities, and so that keeps really the pricing very flexible.
Thank you. Our next question today comes from James Faucette with Morgan Stanley. Please go ahead.
Thank you very much, and thanks for all the details and color on your business thus far this year. A couple of questions from me to follow up on things that you've mentioned. Last year, particularly in the June quarter and as the pandemic was first setting in, you talked a little bit about how the nature of some of your WU.com customers, their profiles and their activity was different. I'm just wondering if you have any color on how retention of those customers that were added at that period has developed, if you continue to see ongoing engagement from them. Just trying to get a little bit of idea if there has been any incremental change in your customer profile generally.
James, this is Raj. I would just say that the profile of the customer has continued to be very strong. The retention levels have continued to increase. These customers are transacting at a frequent level and at higher PPTs or principal per transaction in the business, and that's really having a positive impact on the overall company. The digital part of the business was one of the key drivers of the overall cross-border principal growth. It's a high-quality customer.
Digital partner, just to put things in perspective, we announced that in late 2019. Since then, on digital partners revenue doubled. This is really incremental to our core business. On our customer on Westernunion.com, look, we know that they are more loyal and they use more often, and around 80% are still new to Western Union brand. Which is great, right? It's a different customer segment. Their behavior are a little bit different than retail behavior. They do use sometimes higher RPT, sometimes lower RPT. They really are flexible more often. Also they send a lot money to a wallet or to an account. It is incremental to us, and it's not like suddenly all the retail customers are switching to Western Union. Western Union, with that approach, extended the portfolio and extended the market share. That's a good news here.
I think the other factor is that the need to receive money hasn't gone away. It's higher than ever before in terms of people in receive markets wanting to get money. The digital customers continue to send money at a frequent pace.
Yeah, no, that's great incremental information there, and it seems like you're doing a good job retaining them. My other question was, as it relates to the Walmart relationship and just looking for a little bit more detail there as it relates to your expectations, can you talk about what contribution you think you can get from Walmart? I guess specifically as well, does this relationship make you available in Walmart's international stores?
Yeah, I'm very excited about that. We had Walmart relationship with Mexico and Canada for multi years now. We are enrolling, as we speak, the U.S. relationship. We already enrolled 20% of the locations, and by Q2, we will have all 4,700 locations enrolled. We already see good signs of customers which we start to enroll. We didn't even start with the marketing activities yet to announce it, and that will definitely give our additional incremental revenue since we announced. Within our forecast, the numbers, we hope that that will be, especially in the late part of this year, have an impact to our growth rates, and we are very excited about that. I know that Walmart is also very excited about that, our relationship that brings definitely customers, incremental customers to their stores. The cooperation with Walmart has been excellent. We upgrade our point of sale.
We worked hard with them to have the best of class customer experience on the point of sale. This is important for Walmart, and we really adapt it, and the team work hard. We have our own key account management there. We build a new organization around the Walmart. We have our own key account management there to drive the transactions and the revenue at Walmart locations.
Thank you. Our next question today comes from Ashwin Shirvaikar with Citi. Please go ahead.
Thank you. Hi, Hikmet. Hi, Raj. Good to hear from you both.
Ashwin.
Hey.
Hi. My first question is with regards to the trend in average monthly active users for WU.com. Obviously, over the last four quarters, you guys have maintained sort of this nice mid-40s, upper 40s growth trajectory. Does it necessarily have to go back down to prior levels in the mid-teens type of growth, or can you sustain for a few more quarters this type of growth? Maybe if you could comment on what you saw in April, that might be like a clue to that. I don't know if you could talk about your quarter to date type of trends.
Hi, Ashwin. Yeah, on the monthly active average users, I'd say the absolute level will continue to be strong. Because of the significant growth from last year, we will start to grow over that like we are for the revenues and transactions of that business. It's just a function of numbers going over. The level of customers and the level of the healthiness of the customers and what they're doing with our business has been very high, and we expect that to continue.
We are still, it's an amazing number, Ashwin. A $1 billion+ only on digital revenue, right? Western Union is a big contributor of that, always westernunion.com is a big contributor of that. If you just think about that, a $1 billion+ , it's like two the next competitors both revenue almost or in that area. It is really an impressive number, and I'm very proud of my team and how we are expanding that. It is definitely something really growing very fast.
Thank you. Our next question today comes from Jeff Cantwell with Guggenheim Securities . Please go ahead.
Hi, good afternoon. Thanks for taking my question. Nice results here. I wanted to ask you one about digital. When we all talk about digital, I think oftentimes the focus tends to be on what's occurring on the front end, meaning how you're growing digital revenue and how you're addressing your customer base. It's also sounding now, based on your prepared remarks, like we might want to be thinking about digital on the other side of that coin as well, which is the things you're doing to modernize/digitize yourselves internally. Maybe it's data, maybe it's cloud, migrating to cloud, et cetera. I wanted to ask you if you could talk a little bit about that. What have you been doing internally to modernize, digitize yourselves operationally?
One of the reasons I'm asking is because we saw that called out by Snowflake and their partnership with you guys, and it got us thinking maybe there's been some progress you're making on the back end. I was hoping you can maybe share with us. It seems like it might be a nice way to generate some cost savings, potentially. I was hoping you could talk about that. Thanks.
Yes. What I understood, sorry, the connection was not that well. What I understood is that how do we digitalize also our platform? What do we do here? Also on the receive side, how do we do that? Not only on the send side. That was the question, I guess. Let me start, and Raj, if you would like to add something, more than welcome. Well, obviously digitalization on the front line wouldn't happen if you don't digitalize and invest in your technology. Recent announcement like artificial intelligence, recent announcement what we did putting our system in the cloud, and also our new multi-year settlement transformation program has been big announcement to allow that we are so successful on the front line on the digitalization. That's going to continue. That's only the beginning.
I think on our big part of our investments are really being a tech stack company and really going that direction. Look, just to put things in perspective, we are settling in 130 currencies. We are moving billions of billions of money monthly, yearly, in 131 currencies. That's a huge benefit due to our technology, due to our settlement program, due to our artificial intelligence which we use in compliance programs. That's going to continue doing this our platform more nimble and faster and more agile. The other side on that is that maybe if I got the second part of your question on the receive side, we do also see more and more sending money to wallets, sending money to accounts.
If that's available in the area, the people are getting money on wallets and using their wallets and they use sometimes for merchants, sometimes cash it out from their wallets, sometimes they put it on their accounts. I think there's a really new customer segment we see with our digitalization. Anything you want to add on that, Raj?
No. It broke up at the beginning. Jamie, this is you, right?
This is Jeff.
Oh, sorry. The name broke up at the beginning. I couldn't tell at the beginning. Yeah, I think it's really, we talked about settlement system. That's a brand new settlement system. We went live with the biggest piece of it. We are moving many of our operations to the cloud. All of these things are going to translate into efficiencies down the road, not just in terms of cost savings, but also in terms of how we can interact with the customer and even provide more feedback and information to the customer, making that engagement process very strong. You're right on the mark there. That is exactly what we are doing and need to continue to do.
Thank you. Our next question today comes from Timothy Chiodo with Credit Suisse. Please go ahead.
Thanks a lot. I want to change gears a little bit. You mentioned some of your partnerships to help expand some of your local payout options, whether it be direct to account or potentially to cards. Also just in light of Visa talking about their partnerships with you, Wise, Remitly, MoneyGram, they've publicly called out multiple times very strong transaction growth within remittances with the Visa Direct and Earthport combination. Just wanted to see if you could bring that to life a little bit more. I know we've talked about this in the past, when would be a good use case that your platform would utilize that? Does it come down to the consumer choice, they would like to send to card, or is it to extend your account to account payout capabilities, or what are the other use cases?
The use cases obviously depends on the customer need cases, right? If you send money, we have, by the way, a partnership with Mastercard, we have partnership with Visa, we have with other companies, the partnership. We do the same thing that the others do also. The most important thing also, we have direct access to the accounts. Most of our account payouts is we don't use a switch. We go directly to the bank accounts, which is more efficient, faster, and in real time. If you send money from here to, let's say, from Denver to Bihar in a location in India to a bank account, we could do that directly to a bank account in real time. These are a big advantage, but Western Union has it. It depends also, we do have wallet payouts.
We send direct money to wallets, really depends on the customer use cases. Saying that though, today most of the customers do have cash payout. We do cash payouts. The fastest-growing part is digital payouts, most of the customers still have cash payout. The reason is we have to understand the send and receive dynamics. On some parts of the world, there is no infrastructure to do online payments. There is no infrastructure to do credit card payments. The point-of-sale systems are not there yet. Mobile payments is sometimes challenged. We do definitely read sometimes headlines. We all get excited, the reality is also to paying out to serving to the last mile to the customers. They can go pick up the money and go to a pharmacy and get healthy probably with that money or pay school fees.
We should not forget that there are seven billion people worldwide, and they have different needs. Saying that, Western Union adapted the processes, the customer needs all the time. As I said earlier, the fastest-growing receive side, dropping money is the account and is the wallet, but the biggest part is still cash payouts and the retail locations.
Thank you. Our next question today comes from Bryan Keane of Deutsche Bank. Please go ahead.
Hi, guys. How you doing?
Hey, Bryan.
Hey, Bryan.
I'm doing well. Solid results here. Just want to ask on digital. I'm just trying to think about as we anniversary the large growth rates, what a normalized growth rate might look like and some of the drivers there, thinking about partnerships, maybe how fast retail comes back, some of the things we think about on what a normal digital business might look like as we get through some of the tougher comps. Then secondly, just on the margins, Raj, typically, if you had faster revenue growth or higher revenue growth, you'll have higher margin, but it sounds like you're going to maybe take that opportunity to push some of the investments in 2 Q, then maybe some of those expire as you get into 3Q ,4 Q, and your margins will get a little bit larger in the back half. Thanks.
Sure. Bryan, let me try to address both and then Hikmet can jump in as well if he'd like to on anything. On the digital growth, if I just take you back 18 months, that investor day that we had in the fall of 2019, we thought we could grow digital in the 20% range. None of us expected to have happen what happened last year with the level of digital growth that we had. We would love to see if it can get back to 20% range on an ongoing basis. We're not giving a long-term outlook right now, but that would be a good place for it to be, because then it becomes a significant contributor to the overall company's top line.
I think, Bryan, just to add on that, sorry, I interrupted you. Think about that. The digital business is a much bigger base today. It is a stronger growth. It is possible long term. We don't give long-term guidance, but it is possible the stronger growth long term, because we are growing from a digital business with a stronger growth, with a bigger base, end of this year, $1 billion+, hopefully. Growing from that with a bigger, I'm confident about long-term opportunities of the company.
One thing for sure is that it's changed the overall business mix of the company. In 2019, we were thinking about a $600 million business. We're talking about a billion-dollar business, so it becomes a bigger piece of the overall pie, and it will have a bigger impact. On your question around margins, I think you said it right. We are going to have some continued spending in the second quarter. Second quarter is probably going to have the best revenue growth of the year, given what happened last year with the dip that we had in the second quarter. Margins will gradually improve the next three quarters. The second half is going to be above the full year average based on our current view, and the first half is going to be below the full year average. It's not about any other component of the business. It's just the timing of spending, I would say, on those components.
Thank you. Our next question today comes from Ramsey El-Assal with Barclays. Please go ahead.
Hi, gentlemen. Thanks for taking my question today.
Hey, Ramsey.
I wonder if you could comment on your M&A strategy, and in particular, is it evolving in the context of your more intense focus on consumer product development and innovation? Are you positioned now to maybe do some deals to expand the breadth of your product offerings that maybe weren't in your view a year or two ago?
I think, first of all, our M&A strategy is very much aligned with our corporate strategy. We are at operating strategy. If you look at our business model, obviously expanding to the consumer ecosystem, which is very exciting. Is there anything which can help us to communicate with the customer in a better way? Is there a really connect with the customer in a better way in a technology environment? That's something we are looking at it. Are there companies there you could support in our vision to grow, to be faster, to offer additional services? That could be some exciting thing. The other side also, we are looking on M&A opportunities as we do all the time, which would make our platform more agile, faster, higher technology. The third one is probably, is there also other companies which we could find synergy effects?
That's really our strategy. It's nothing that is without the ordinary, our existing strategy. This is the environment we are looking at. It has to be also, obviously, the most important thing, it has to have a good return for shareholders.
Thank you. Our next question today comes from Andrew Jeffrey with Truist Securities. Please go ahead.
Hi. Good afternoon, gentlemen. Appreciate you taking the question.
Hey, Andrew.
I noticed that capitalized agent costs have risen, I think, for four quarters, having stayed low for quite some time.
Can you speak up a little bit? It's hard.
Yeah, you're fading in and out there.
Thank you.
Yeah. Sorry about that. Hopefully, this is better. I'm just asking about capitalized agent costs, which I've noticed have risen four quarters in a row after having been pretty low for an extended period of time. I wonder if you could just talk about agent economics and the competitive environment on that front.
Andrew, for CapEx, if you look at our historical numbers, we've been in the 3%-5% of revenues range for capital expenditures, and we expect that to be the case again this year. The last couple of years, you're right, we were at the lower end of that range. It's been in the 3%-5% range. The signing bonuses, agent bonuses can be lumpy in nature. It just depends on when the renewals actually come through, but nothing unusual. In any given year, because most of our contracts are five years in maturity, we have about 20% of our contracts renewing in a given year. Sometimes that's going to mean some bigger agents and smaller agents. Nothing unusual there. It's part of the plan, but we're within the range again for the full year.
Thank you. It looks like we have time for one more question. Our next question comes from Jamie Friedman with Susquehanna. Please go ahead.
Good results here, guys. I just want to ask, of the two major digital partners that you showcased at the Analyst Day, when was that? Back in 2019. Is there one that's more pronounced than the other? Obviously, they're both doing great, but if we could just compare the Saudi versus the Russia, that would be helpful. Thank you.
I think so from performance-wise, they're very exciting both partners. They are the largest, obviously, as we said, and they're contributing incremental transactions and revenue to our-- with a high profitability contribution margins are amazing of these two partners, which we really like. We see that as incremental. We do also other partners, right? It's not only they do. We have only two partners. We do have other partners, but they are smaller, that's why we don't call them up. We have about, I would say, 50+ , almost 100 partners like that, but smaller banks or financial institutions. They don't have that amount of big transactions. I'm very excited also about the Saudi Arabia Telecom Company. As you know, we invested there in the Saudi Arabia Telecom Company, and we will hopefully close within this quarter this deal with them.
This deal gives us also the opportunity to expand and learn with them and expand the ecosystem into Saudi Arabia, being a partner with them and really serving the Saudi Arabian customer more than only sending money. It is aligned with our previous question with M&A. It is aligned with our strategy. It's within our ecosystem. We are doing together. We have a good partner here. It's a long-term, it's very fast-growing partner. We are excited about that.
Great. I want to thank everybody for your time today and your interest in Western Union, and look forward to speaking again in the future.
Thank you. This concludes today's conference call.
Thank you, and stay healthy. Stay healthy. That's important. All the best.
Thank you all for attending today's presentation. You may now disconnect your lines. Goodbye.