Q3 2023 HIGHLIGHTS
- Total revenue grew 21%1
- Total recurring revenue grew 10%1
- Net income of $38 million grew 64%
- Total EBITDA grew 147% to $103 million1
- Reiterating guidance for full-year 2023
ACI Worldwide (NASDAQ: ACIW), a global leader in
mission-critical, real-time payments software, announced financial
results today for the quarter ended September 30, 2023.
“We are pleased to report solid third quarter results,” said
Thomas Warsop, President and CEO of ACI Worldwide. “Operational
focus helped us exceed our overall financial targets. Our Bank
segment continues to show encouraging trends, including 13%
adjusted recurring revenue growth, and our Biller segment has
materially accelerated as a result of new customer onboarding and
our interchange improvement program. Further, we were able to sign
some new contracts in our pipeline earlier than planned, which
reduces risk in achieving our full-year expectations. Given our
predictable renewal calendar, as well as newly signed customers
scheduled for implementation, we are confident in reiterating
guidance for this year, as well as for our revenue growth target of
7-9% in 2024.”
FINANCIAL SUMMARY
In Q3 2023, total revenue was $363 million, up 21% compared to
the same period in 2022. Recurring revenue in Q3 grew 10% versus
last year. Net income in the quarter was $38 million, up from $23
million last year. Total adjusted EBITDA in the quarter was $103
million, up 147% from Q3 2022. Percentage change comparisons are
adjusted for FX and the Corporate Online Banking divestiture1.
- Bank segment total revenue increased 42%, while Bank segment
recurring revenue, consisting of maintenance and SaaS revenue, grew
13% and Bank segment adjusted EBITDA doubled to $91 million versus
Q3 2022, after adjusting for FX and the divestiture1. As previously
discussed, the timing of larger license renewal events is heavily
weighted to the back half of 2023.
- Merchant segment revenue and Merchant segment adjusted EBITDA
were flat versus Q3 2022, adjusted for FX.
- Biller segment revenue increased 11% and Biller segment
adjusted EBITDA increased 48% versus Q3 2022, driven by new
customer onboarding and progress with our interchange improvement
program.
ACI ended the quarter with $140 million in cash on hand and a
debt balance of $1 billion, which represents a net debt leverage
ratio of 2.4x, down from 2.9x last quarter. The company did not
repurchase any shares in the quarter and has $200 million available
on the share repurchase authorization.
REITERATING 2023 GUIDANCE
For the full year of 2023, the company expects revenue growth to
be in the mid-single digits on a constant currency and
divestiture-adjusted basis, or in the range of $1.436 billion to
$1.466 billion. The company expects adjusted EBITDA to be in the
range of $380 million to $395 million with net adjusted EBITDA
margin expansion. This excludes one-time charges related to the
move of the company’s European data centers to the public cloud and
one-time costs to implement certain efficiency strategies.
1 Adjusted for foreign currency fluctuations and the divestiture of
Corporate Online Banking in September 2022
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS
Today, management will host a conference call at 8:30 am ET to
discuss these results. Interested persons may access a real-time
audio broadcast of the teleconference at
http://investor.aciworldwide.com/ or use the following number for
dial-in participation: toll-free 1 (888) 660-6377; and conference
code 3153574. A call replay will be available for two weeks on
(855) 859-2056 for US/Canada callers and +1 (404) 537-3406 for
international participants.
About ACI Worldwide
ACI Worldwide is a global leader in mission-critical, real-time
payments software. Our proven, secure and scalable software
solutions enable leading corporations, fintechs, and financial
disruptors to process and manage digital payments, power
omni-commerce payments, present and process bill payments, and
manage fraud and risk. We combine our global footprint with a local
presence to drive the real-time digital transformation of payments
and commerce.
© Copyright ACI Worldwide, Inc. 2023.
ACI, ACI Worldwide, ACI Payments, Inc., ACI Pay, Speedpay and
all ACI product/solution names are trademarks or registered
trademarks of ACI Worldwide, Inc., or one of its subsidiaries, in
the United States, other countries or both. Other parties'
trademarks referenced are the property of their respective
owners.
To supplement our financial results presented on a GAAP basis,
we use the non-GAAP measures indicated in the tables, which exclude
significant transaction-related expenses, as well as other
significant non-cash expenses such as depreciation, amortization,
and stock-based compensation, that we believe are helpful in
understanding our past financial performance and our future
results. The presentation of these non-GAAP financial measures
should be considered in addition to our GAAP results and are not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
GAAP. Management generally compensates for limitations in the use
of non-GAAP financial measures by relying on comparable GAAP
financial measures and providing investors with a reconciliation of
non-GAAP financial measures only in addition to and in conjunction
with results presented in accordance with GAAP.
We believe that these non-GAAP financial measures reflect an
additional way to view aspects of our operations that, when viewed
with our GAAP results, provide a more complete understanding of
factors and trends affecting our business. Certain non-GAAP
measures include:
- Adjusted EBITDA: net income (loss) plus income tax expense
(benefit), net interest income (expense), net other income
(expense), depreciation, amortization and stock-based compensation,
as well as significant transaction-related expenses. Adjusted
EBITDA should be considered in addition to, rather than as a
substitute for, net income (loss).
- Net Adjusted EBITDA Margin: Adjusted EBITDA divided by revenue
net of pass-through interchange revenue. Net Adjusted EBITDA Margin
should be considered in addition to, rather than as a substitute
for, net income (loss).
- Diluted EPS adjusted for non-cash and significant transaction
related items: diluted EPS plus tax effected significant
transaction related items, amortization of acquired intangibles and
software, and non-cash stock-based compensation. Diluted EPS
adjusted for non-cash and significant transaction related items
should be considered in addition to, rather than as a substitute
for, diluted EPS.
- Recurring Revenue: revenue from software as a service and
platform as a service fees and maintenance fees. Recurring revenue
should be considered in addition to, rather than as a substitute
for, total revenue.
- ARR: New annual recurring revenue expected to be generated from
new accounts, new applications, and add-on sales bookings contracts
signed in the period.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements based on
current expectations that involve a number of risks and
uncertainties. Generally, forward-looking statements do not relate
strictly to historical or current facts and may include words or
phrases such as “believes,” “will,” “expects,” “anticipates,”
“intends,” and words and phrases of similar impact. The
forward-looking statements are made pursuant to safe harbor
provisions of the Private Securities Litigation Reform Act of
1995.
Forward-looking statements in this press release include, but
are not limited to: (i) our signing of some new contracts in our
pipeline earlier than planned, which reduces risk in achieving our
full year expectations, (ii) given our predictable renewal
calendar, as well as newly signed customers scheduled for
implementation, we are confident in reiterating guidance for this
year, as well as for our revenue growth target of 7-9% in 2024, and
(iii) our expectations for full year 2023 revenue and adjusted
EBITDA financial guidance.
All of the foregoing forward-looking statements are expressly
qualified by the risk factors discussed in our filings with the
Securities and Exchange Commission. Such factors include, but are
not limited to, increased competition, business interruptions or
failure of our information technology and communication systems,
security breaches or viruses, our ability to attract and retain
senior management personnel and skilled technical employees, future
acquisitions, strategic partnerships and investments, divestitures
and other restructuring activities, implementation and success of
our strategy, impact if we convert some or all on-premise licenses
from fixed-term to subscription model, anti-takeover provisions,
exposure to credit or operating risks arising from certain payment
funding methods, customer reluctance to switch to a new vendor, our
ability to adequately defend our intellectual property, litigation,
consent orders and other compliance agreements, our offshore
software development activities, risks from operating
internationally, including fluctuations in currency exchange rates,
events in eastern Europe, adverse changes in the global economy,
compliance of our products with applicable legislation,
governmental regulations and industry standards, the complexity of
our products and services and the risk that they may contain hidden
defects, complex regulations applicable to our payments business,
our compliance with privacy and cybersecurity regulations, our
involvement in investigations, lawsuits and other expense and
time-consuming legal proceedings, exposure to unknown tax
liabilities, changes in tax laws and regulations, consolidations
and failures in the financial services industry, volatility in our
stock price, demand for our products, failure to obtain renewals of
customer contracts or to obtain such renewals on favorable terms,
delay or cancellation of customer projects or inaccurate project
completion estimates, impairment of our goodwill or intangible
assets, the accuracy of management’s backlog estimates, the
cyclical nature of our revenue and earnings and the accuracy of
forecasts due to the concentration of revenue-generating activity
during the final weeks of each quarter, restrictions and other
financial covenants in our debt agreements, our existing levels of
debt, events outside of our control including natural disasters,
wars, and outbreaks of disease, and revenues or revenue mix. For a
detailed discussion of these risk factors, parties that are relying
on the forward-looking statements should review our filings with
the Securities and Exchange Commission, including our most recently
filed Annual Report on Form 10-K and our Quarterly Reports on Form
10-Q.
ACI WORLDWIDE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited and in
thousands)
September 30, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
$
139,520
$
124,981
Receivables, net of allowances
370,766
403,781
Settlement assets
649,494
540,667
Prepaid expenses
32,176
28,010
Other current assets
34,754
17,366
Total current assets
1,226,710
1,114,805
Noncurrent assets
Accrued receivables, net
279,303
297,818
Property and equipment, net
41,098
52,499
Operating lease right-of-use assets
33,609
40,031
Software, net
105,324
129,109
Goodwill
1,226,026
1,226,026
Intangible assets, net
203,137
228,698
Deferred income taxes, net
75,448
53,738
Other noncurrent assets
64,173
67,171
TOTAL ASSETS
$
3,254,828
$
3,209,895
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
40,951
$
47,997
Settlement liabilities
648,956
539,087
Employee compensation
42,025
45,289
Current portion of long-term debt
74,350
65,521
Deferred revenue
61,438
58,303
Other current liabilities
77,910
102,645
Total current liabilities
945,630
858,842
Noncurrent liabilities
Deferred revenue
23,107
23,233
Long-term debt
987,221
1,024,351
Deferred income taxes, net
33,687
40,371
Operating lease liabilities
28,657
33,910
Other noncurrent liabilities
25,491
36,001
Total liabilities
2,043,793
2,016,708
Commitments and contingencies
Stockholders’ equity
Preferred stock
—
—
Common stock
702
702
Additional paid-in capital
708,506
702,458
Retained earnings
1,272,351
1,273,458
Treasury stock
(653,162
)
(665,771
)
Accumulated other comprehensive loss
(117,362
)
(117,660
)
Total stockholders’ equity
1,211,035
1,193,187
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
3,254,828
$
3,209,895
ACI WORLDWIDE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(unaudited and in thousands,
except per share amounts)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Revenues
Software as a service and platform as a
service
$
211,369
$
195,540
$
625,975
$
597,080
License
79,679
43,661
142,681
168,260
Maintenance
51,942
49,163
153,436
151,143
Services
20,025
18,227
53,924
53,613
Total revenues
363,015
306,591
976,016
970,096
Operating expenses
Cost of revenue (1)
177,625
171,753
537,522
517,372
Research and development
33,739
35,899
106,122
114,348
Selling and marketing
29,442
32,794
98,166
102,793
General and administrative
29,821
30,516
92,675
84,753
Depreciation and amortization
30,464
32,140
93,439
95,218
Total operating expenses
301,091
303,102
927,924
914,484
Operating income
61,924
3,489
48,092
55,612
Other income (expense)
Interest expense
(19,840
)
(14,336
)
(58,641
)
(37,014
)
Interest income
3,495
2,995
10,458
9,205
Other, net
1,084
41,545
(6,403
)
45,801
Total other income (expense)
(15,261
)
30,204
(54,586
)
17,992
Income (loss) before income
taxes
46,663
33,693
(6,494
)
73,604
Income tax expense (benefit)
8,752
10,576
(5,387
)
21,655
Net income (loss)
$
37,911
$
23,117
$
(1,107
)
$
51,949
Income (loss) per common share
Basic
$
0.35
$
0.20
$
(0.01
)
$
0.45
Diluted
$
0.35
$
0.20
$
(0.01
)
$
0.45
Weighted average common shares
outstanding
Basic
108,667
113,812
108,428
114,584
Diluted
108,933
114,348
108,428
115,211
(1) The cost of revenue excludes charges
for depreciation but includes amortization of purchased and
developed software for resale.
ACI WORLDWIDE, INC. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited and in
thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2023
2022
2023
2022
Cash flows from operating activities:
Net income (loss)
$
37,911
$
23,117
$
(1,107
)
$
51,949
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Depreciation
5,631
6,044
18,722
17,052
Amortization
24,832
26,096
74,716
78,817
Amortization of operating lease
right-of-use assets
2,699
2,807
9,190
8,296
Amortization of deferred debt issuance
costs
923
1,136
3,415
3,435
Deferred income taxes
(2,566
)
(2,674
)
(25,207
)
(9,059
)
Stock-based compensation expense
6,822
7,126
17,537
21,884
Gain on divestiture
—
(38,452
)
—
(38,452
)
Other
1,857
1,359
2,168
2,483
Changes in operating assets and
liabilities:
Receivables
(39,844
)
19,807
42,012
5,767
Accounts payable
(5,244
)
(1,728
)
(7,198
)
(3,047
)
Accrued employee compensation
1,749
6,329
(2,879
)
(3,872
)
Deferred revenue
(8,296
)
(11,899
)
4,404
(6,367
)
Other current and noncurrent assets and
liabilities
(1,208
)
(4,865
)
(52,999
)
(26,920
)
Net cash flows from operating
activities
25,266
34,203
82,774
101,966
Cash flows from investing activities:
Purchases of property and equipment
(3,380
)
(4,466
)
(7,956
)
(8,123
)
Purchases of software and distribution
rights
(7,550
)
(7,656
)
(22,571
)
(18,394
)
Proceeds from divestiture
—
100,139
—
100,139
Net cash flows from investing
activities
(10,930
)
88,017
(30,527
)
73,622
Cash flows from financing activities:
Proceeds from issuance of common stock
696
839
2,122
2,801
Proceeds from exercises of stock
options
263
395
3,132
1,792
Repurchase of stock-based compensation
awards for tax withholdings
(883
)
(18
)
(4,203
)
(5,820
)
Repurchases of common stock
—
(28,227
)
—
(90,934
)
Proceeds from revolving credit
facility
20,000
25,000
75,000
85,000
Repayment of revolving credit facility
(6,000
)
(55,000
)
(51,000
)
(75,000
)
Repayment of term portion of credit
agreement
(19,475
)
(49,606
)
(53,556
)
(70,825
)
Payments on or proceeds from other debt,
net
(643
)
(737
)
(12,473
)
(10,106
)
Payments for debt issuance costs
—
—
(2,160
)
—
Net increase (decrease) in settlement
assets and liabilities
19,452
24,659
(4,635
)
20,084
Net cash flows from financing
activities
13,410
(82,695
)
(47,773
)
(143,008
)
Effect of exchange rate fluctuations on
cash
(1,039
)
1,002
4,388
(60
)
Net increase in cash and cash
equivalents
26,707
40,527
8,862
32,520
Cash and cash equivalents, including
settlement deposits, beginning of period
196,827
176,135
214,672
184,142
Cash and cash equivalents, including
settlement deposits, end of period
$
223,534
$
216,662
$
223,534
$
216,662
Reconciliation of cash and cash
equivalents to the Consolidated Balance Sheets
Cash and cash equivalents
$
139,520
$
134,799
$
139,520
$
134,799
Settlement deposits
84,014
81,863
84,014
81,863
Total cash and cash equivalents
$
223,534
$
216,662
$
223,534
$
216,662
Three Months Ended
September 30,
Nine Months Ended
September 30,
Adjusted EBITDA (millions)
2023
2022
2023
2022
Net income (loss)
$
37.9
$
23.1
$
(1.1
)
$
51.9
Plus:
Income tax expense (benefit)
8.7
10.6
(5.4
)
21.7
Net interest expense
16.4
11.3
48.2
27.8
Net other income (expense)
(1.1
)
(41.4
)
6.4
(45.8
)
Depreciation expense
5.6
6.0
18.7
17.1
Amortization expense
24.8
26.1
74.7
78.8
Non-cash stock-based compensation
expense
6.8
7.1
17.5
21.9
Adjusted EBITDA before significant
transaction-related expenses
$
99.1
$
42.8
$
159.0
$
173.4
Significant transaction-related
expenses:
Cost reduction strategies
3.8
—
19.7
—
European datacenter migration
0.4
1.7
2.6
3.4
Other
0.1
1.2
4.4
2.6
Adjusted EBITDA
$
103.4
$
45.7
$
185.7
$
179.4
Revenue, net of interchange:
Revenue
$
363.0
$
306.6
$
976.0
$
970.1
Interchange
102.7
98.4
315.0
295.4
Revenue, net of interchange
$
260.3
$
208.2
$
661.0
$
674.7
Net Adjusted EBITDA Margin
40
%
22
%
28
%
27
%
Three Months Ended
September 30,
Nine Months Ended
September 30,
Segment Information (millions)
2023
2022
2023
2022
Revenue
Banks
$
155.7
$
117.5
$
361.2
$
391.6
Merchants
36.3
35.6
107.6
113.1
Billers
171.0
153.5
507.2
465.4
Total
$
363.0
$
306.6
$
976.0
$
970.1
Recurring Revenue
Banks
$
58.2
$
57.3
$
171.2
$
179.3
Merchants
34.1
33.8
101.0
103.5
Billers
171.0
153.6
507.2
465.4
Total
$
263.3
$
244.7
$
779.4
$
748.2
Segment Adjusted EBITDA
Banks
$
91.0
$
49.8
$
167.3
$
184.7
Merchants
10.3
9.8
26.8
32.2
Billers
39.2
26.3
100.1
81.0
Three Months Ended September
30,
2023
2022
EPS Impact of Non-cash and Significant
Transaction-related Items (millions)
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
GAAP net income (loss)
$
0.35
$
37.9
$
0.20
$
23.1
Adjusted for:
Gain on divestiture
—
—
(0.26
)
(29.2
)
Significant transaction-related
expenses
0.03
3.3
0.02
2.2
Amortization of acquisition-related
intangibles
0.06
6.4
0.06
6.7
Amortization of acquisition-related
software
0.03
3.8
0.04
4.5
Non-cash stock-based compensation
0.05
5.2
0.05
5.4
Total adjustments
$
0.17
$
18.7
$
(0.09
)
$
(10.4
)
Diluted EPS adjusted for non-cash and
significant transaction-related items
$
0.52
$
56.6
$
0.11
$
12.7
Nine Months Ended September
30,
2023
2022
EPS Impact of Non-cash and Significant
Transaction-related Items (millions)
EPS Impact
$ in Millions
(Net of Tax)
EPS Impact
$ in Millions
(Net of Tax)
GAAP net income (loss)
$
(0.01
)
$
(1.1
)
$
0.45
$
51.9
Adjusted for:
Gain on divestiture
—
—
(0.25
)
(29.2
)
Significant transaction-related
expenses
0.19
20.4
0.04
4.7
Amortization of acquisition-related
intangibles
0.18
19.3
0.18
20.6
Amortization of acquisition-related
software
0.11
12.0
0.12
14.1
Non-cash stock-based compensation
0.12
13.3
0.14
16.6
Total adjustments
$
0.60
$
65.0
$
0.23
$
26.8
Diluted EPS adjusted for non-cash and
significant transaction-related items
$
0.59
$
63.9
$
0.68
$
78.7
Three Months Ended
September 30,
Nine Months Ended
September 30,
Recurring Revenue (millions)
2023
2022
2023
2022
SaaS and PaaS fees
$
211.4
$
195.5
$
626.0
$
597.1
Maintenance fees
51.9
49.2
153.4
151.1
Recurring Revenue
$
263.3
$
244.7
$
779.4
$
748.2
Annual Recurring Revenue (ARR) Bookings
(millions)
Three Months Ended
September 30,
TTM Ended September
30,
2023
2022
2023
2022
ARR bookings
$
20.5
$
30.3
$
84.9
$
93.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102363165/en/
Investor Relations: John Kraft SVP, Head of Strategy and Finance
239-403-4627 / john.kraft@aciworldwide.com
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