Q3 2024 HIGHLIGHTS
- Revenue up 24% versus Q3 2023
- Net income up 115% versus Q3 2023
- Adjusted EBITDA up 61% versus Q3 2023
- Cash flow from operating activities up 114% versus Q3
2023
- Raising guidance range for full-year 2024
ACI Worldwide (NASDAQ: ACIW), an original innovator in global
payments technology, announced financial results today for the
quarter ended September 30, 2024.
“We are very pleased with our third quarter results and the
continued positive momentum in the business. We saw particular
strength within our Bank and Merchant segments and are once again
raising our full-year outlook,” said Thomas Warsop, president and
CEO of ACI Worldwide. “This year the team has done a tremendous job
signing renewal contracts earlier in the year. This initiative is
enabling our commercial team to spend more time on prospects and
winning new business, which has allowed us to outperform our
forecasts. Further, signing these new contracts earlier in the year
helps reduce the heavy seasonality we have historically seen and
simply reduces the risk of attaining our full-year financial
guidance.
“Our pipelines remain strong across our segments, and we are
well-positioned for future growth as we continue to invest in
innovation, execute on our strategy, and deliver value to our
customers and shareholders.”
“Our cash flow from operating activities increased 114% over Q3
last year and we exited the quarter with net debt leverage ratio of
1.6x adjusted EBITDA, with approximately $650 million in
liquidity,” said Scott Behrens, chief financial officer of ACI
Worldwide. “Our strong cash flow growth and our lowest leverage in
over a decade, combined with our improved outlook for 2024 and our
expectations for continued strength in 2025, enable us to reduce
our long-term stated leverage target from 2.5x to 2.0x. We will
continue to maintain a disciplined, long-term focused capital
allocation strategy that balances re-investment in the business,
accretive M&A and share repurchases, while maintaining a strong
balance sheet with ample liquidity and financial flexibility.”
FINANCIAL SUMMARY
In Q3 2024, revenue was $452 million, up 24% from Q3 2023. Net
income was $81 million, up 115% from $38 million in Q3 2023.
Adjusted EBITDA in Q3 2024 was $167 million, up 61% from Q3 2023.
Cash flow from operating activities in Q3 2024 was $54 million, up
114% from $25 million in Q3 2023.
- Bank segment revenue increased 43% in Q3 2024 and Bank segment
adjusted EBITDA increased 69% versus Q3 2023.
- Merchant segment revenue increased 38% in Q3 2024 and Merchant
segment adjusted EBITDA increased 159% versus Q3 2023.
- Biller segment revenue increased 5% in Q3 2024 and Biller
segment adjusted EBITDA decreased 21%. Q3 2023 included certain
one-time non-recurring margin benefits that did not recur in Q3
2024.
ACI ended Q3 2024 with $178 million in cash on hand and a debt
balance of $1 billion, which represents a net debt leverage ratio
of 1.6x adjusted EBITDA.
During the quarter the company repurchased approximately 200,000
shares for $8 million in capital and year-to-date 2024 has
repurchased approximately 4 million shares for $128 million in
capital. At the end of the quarter, the company had $372 million
remaining available on the share repurchase authorization.
RAISING 2024 GUIDANCE
For the full year of 2024, we are raising our guidance for both
revenue and adjusted EBITDA. We now expect revenue to be in the
range of $1.567 billion to $1.601 billion, up from the range of
$1.557 billion to $1.591 billion. We now expect adjusted EBITDA to
be in the range of $433 million to $448 million, up from the range
of $423 million to $438 million.
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS
Today, management will host a conference call at 8:30 a.m. 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.
About ACI Worldwide
ACI Worldwide, an original innovator in global payments
technology, delivers transformative software solutions that power
intelligent payments orchestration in real time
so banks, billers, and merchants can drive
growth, while continuously modernizing their payment
infrastructures, simply and securely. With nearly 50 years of
trusted payments expertise, we combine our global footprint with a
local presence to offer enhanced payment experiences to stay ahead
of constantly changing payment challenges and opportunities.
© Copyright ACI Worldwide, Inc. 2024.
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) the continued positive momentum in the
business, (ii) our pipelines remain strong across our segments, and
we are well-positioned for future growth as we continue to invest
in innovation, execute on our strategy, and deliver value to our
customers and shareholders, (iii) we will continue to maintain a
disciplined, long-term focused capital allocation strategy that
balances re-investment in the business, accretive M&A and share
repurchases, while maintaining a strong balance sheet with ample
liquidity and financial flexibility (iv) target leverage and
full-year 2024 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 and the Middle East, 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, 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, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
$
177,860
$
164,239
Receivables, net of allowances
424,518
452,337
Settlement assets
428,479
723,039
Prepaid expenses
31,878
31,479
Other current assets
22,865
35,551
Total current assets
1,085,600
1,406,645
Noncurrent assets
Accrued receivables, net
338,977
313,983
Property and equipment, net
31,441
37,856
Operating lease right-of-use assets
29,181
34,338
Software, net
90,313
108,418
Goodwill
1,226,026
1,226,026
Intangible assets, net
172,310
195,646
Deferred income taxes, net
64,674
58,499
Other noncurrent assets
54,463
63,328
TOTAL ASSETS
$
3,092,985
$
3,444,739
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities
Accounts payable
$
47,912
$
45,964
Settlement liabilities
428,080
721,164
Employee compensation
42,806
53,892
Current portion of long-term debt
34,910
74,405
Deferred revenue
68,550
59,580
Other current liabilities
75,036
82,244
Total current liabilities
697,294
1,037,249
Noncurrent liabilities
Deferred revenue
19,315
24,780
Long-term debt
959,387
963,599
Deferred income taxes, net
38,439
40,735
Operating lease liabilities
23,601
29,074
Other noncurrent liabilities
25,319
25,005
Total liabilities
1,763,355
2,120,442
Commitments and contingencies
Stockholders’ equity
Preferred stock
—
—
Common stock
702
702
Additional paid-in capital
725,724
712,994
Retained earnings
1,499,530
1,394,967
Treasury stock
(791,353
)
(674,896
)
Accumulated other comprehensive loss
(104,973
)
(109,470
)
Total stockholders’ equity
1,329,630
1,324,297
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY
$
3,092,985
$
3,444,739
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,
2024
2023
2024
2023
Revenues
Software as a service and platform as a
service
$
223,367
$
211,369
$
674,498
$
625,975
License
157,429
79,679
252,984
142,681
Maintenance
47,559
51,942
144,046
153,436
Services
23,397
20,025
69,722
53,924
Total revenues
451,752
363,015
1,141,250
976,016
Operating expenses
Cost of revenue (1)
197,351
177,625
591,696
537,522
Research and development
37,660
33,739
108,063
106,122
Selling and marketing
28,691
29,442
83,992
98,166
General and administrative
33,949
29,821
84,942
92,675
Depreciation and amortization
31,515
30,464
86,710
93,439
Total operating expenses
329,166
301,091
955,403
927,924
Operating income
122,586
61,924
185,847
48,092
Other income (expense)
Interest expense
(18,356
)
(19,840
)
(55,837
)
(58,641
)
Interest income
3,871
3,495
11,833
10,458
Other, net
(823
)
1,084
(1,692
)
(6,403
)
Total other income (expense)
(15,308
)
(15,261
)
(45,696
)
(54,586
)
Income (loss) before income
taxes
107,278
46,663
140,151
(6,494
)
Income tax expense (benefit)
25,851
8,752
35,588
(5,387
)
Net income (loss)
$
81,427
$
37,911
$
104,563
$
(1,107
)
Income (loss) per common share
Basic
$
0.78
$
0.35
$
0.99
$
(0.01
)
Diluted
$
0.77
$
0.35
$
0.98
$
(0.01
)
Weighted average common shares
outstanding
Basic
104,770
108,667
105,651
108,428
Diluted
106,018
108,933
106,552
108,428
(1) The cost of revenue excludes charges
for depreciation and amortization.
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,
2024
2023
2024
2023
Cash flows from operating activities:
Net income (loss)
$
81,427
$
37,911
$
104,563
$
(1,107
)
Adjustments to reconcile net income (loss)
to net cash flows from operating activities:
Depreciation
7,804
5,631
14,999
18,722
Amortization
23,711
24,832
71,711
74,716
Amortization of operating lease
right-of-use assets
2,338
2,699
7,337
9,190
Amortization of deferred debt issuance
costs
659
923
2,257
3,415
Deferred income taxes
(3,745
)
(2,566
)
(2,229
)
(25,207
)
Stock-based compensation expense
11,346
6,822
30,165
17,537
Other
2,247
1,857
180
2,168
Changes in operating assets and
liabilities:
Receivables
(95,899
)
(39,844
)
3,699
42,012
Accounts payable
(4,091
)
(5,244
)
758
(7,198
)
Accrued employee compensation
8,759
1,749
(11,125
)
(2,879
)
Deferred revenue
(6,433
)
(8,296
)
1,884
4,404
Other current and noncurrent assets and
liabilities
25,885
(1,208
)
8,067
(52,999
)
Net cash flows from operating
activities
54,008
25,266
232,266
82,774
Cash flows from investing activities:
Purchases of property and equipment
(3,509
)
(3,380
)
(8,463
)
(7,956
)
Purchases of software and distribution
rights
(4,154
)
(7,550
)
(23,178
)
(22,571
)
Net cash flows from investing
activities
(7,663
)
(10,930
)
(31,641
)
(30,527
)
Cash flows from financing activities:
Proceeds from issuance of common stock
732
696
2,129
2,122
Proceeds from exercises of stock
options
1,202
263
1,954
3,132
Repurchase of stock-based compensation
awards for tax withholdings
(2,960
)
(883
)
(9,299
)
(4,203
)
Repurchases of common stock
(7,996
)
—
(127,670
)
—
Proceeds from revolving credit
facility
20,000
20,000
184,000
75,000
Repayment of revolving credit facility
(25,000
)
(6,000
)
(177,000
)
(51,000
)
Proceeds from term portion of credit
agreement
—
—
500,000
—
Repayment of term portion of credit
agreement
(9,375
)
(19,475
)
(547,823
)
(53,556
)
Payments on or proceeds from other debt,
net
(630
)
(643
)
(9,299
)
(12,473
)
Payments for debt issuance costs
—
—
(5,141
)
(2,160
)
Net increase (decrease) in settlement
assets and liabilities
23,855
19,452
17,704
(4,635
)
Net cash flows from financing
activities
(172
)
13,410
(170,445
)
(47,773
)
Effect of exchange rate fluctuations on
cash
(1,621
)
(1,039
)
(331
)
4,388
Net increase in cash and cash
equivalents
44,552
26,707
29,849
8,862
Cash and cash equivalents, including
settlement deposits, beginning of period
224,118
196,827
238,821
214,672
Cash and cash equivalents, including
settlement deposits, end of period
$
268,670
$
223,534
$
268,670
$
223,534
Reconciliation of cash and cash
equivalents to the Consolidated Balance Sheets
Cash and cash equivalents
$
177,860
$
139,520
$
177,860
$
139,520
Settlement deposits
90,810
84,014
90,810
84,014
Total cash and cash equivalents
$
268,670
$
223,534
$
268,670
$
223,534
Three Months Ended
September 30,
Nine Months Ended
September 30,
Adjusted EBITDA (millions)
2024
2023
2024
2023
Net income (loss)
$
81.4
$
37.9
$
104.6
$
(1.1
)
Plus:
Income tax expense (benefit)
25.9
8.7
35.6
(5.4
)
Net interest expense
14.5
16.4
44.0
48.2
Net other (income) expense
0.8
(1.1
)
1.7
6.4
Depreciation expense
7.8
5.6
15.0
18.7
Amortization expense
23.7
24.8
71.7
74.7
Non-cash stock-based compensation
expense
11.3
6.8
30.2
17.5
Adjusted EBITDA before significant
transaction-related expenses
$
165.4
$
99.1
$
302.8
$
159.0
Significant transaction-related
expenses:
Cost reduction strategies
1.2
3.8
4.3
19.7
European datacenter migration
—
0.4
—
2.6
Other
0.3
0.1
1.0
4.4
Adjusted EBITDA
$
166.9
$
103.4
$
308.1
$
185.7
Revenue, net of interchange:
Revenue
$
451.8
$
363.0
$
1,141.3
$
976.0
Interchange
117.1
102.7
353.6
315.0
Revenue, net of interchange
$
334.7
$
260.3
$
787.7
$
661.0
Net Adjusted EBITDA Margin
50
%
40
%
39
%
28
%
Three Months Ended
September 30,
Nine Months Ended
September 30,
Segment Information (millions)
2024
2023
2024
2023
Revenue
Banks
$
222.0
$
155.7
$
471.1
$
361.2
Merchants
50.2
36.3
123.9
107.6
Billers
179.6
171.0
546.3
507.2
Total
$
451.8
$
363.0
$
1,141.3
$
976.0
Recurring Revenue
Banks
$
55.6
$
58.2
$
167.1
$
171.2
Merchants
35.7
34.1
105.1
101.0
Billers
179.6
171.0
546.3
507.2
Total
$
270.9
$
263.3
$
818.5
$
779.4
Segment Adjusted EBITDA
Banks
$
153.9
$
91.0
$
274.8
$
167.3
Merchants
26.7
10.3
52.7
26.8
Billers
30.9
39.2
99.1
100.1
Note: Amounts may not recalculate due to
rounding.
Three Months Ended September
30,
2024
2023
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
$
0.77
$
81.4
$
0.35
$
37.9
Adjusted for:
Significant transaction-related
expenses
0.04
4.5
0.03
3.3
Amortization of acquisition-related
intangibles
0.05
5.4
0.06
6.4
Amortization of acquisition-related
software
0.03
3.4
0.03
3.8
Non-cash stock-based compensation
0.08
8.6
0.05
5.2
Total adjustments
$
0.20
$
21.9
$
0.17
$
18.7
Diluted EPS adjusted for non-cash and
significant transaction-related items
$
0.97
$
103.3
$
0.52
$
56.6
Nine Months Ended September
30,
2024
2023
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)
$
0.98
$
104.6
$
(0.01
)
$
(1.1
)
Adjusted for:
Significant transaction-related
expenses
0.07
7.4
0.19
20.4
Amortization of acquisition-related
intangibles
0.17
18.1
0.18
19.3
Amortization of acquisition-related
software
0.09
10.1
0.11
12.0
Non-cash stock-based compensation
0.21
22.9
0.12
13.3
Total adjustments
$
0.54
$
58.5
$
0.60
$
65.0
Diluted EPS adjusted for non-cash and
significant transaction-related items
$
1.52
$
163.1
$
0.59
$
63.9
Three Months Ended
September 30,
Nine Months Ended
September 30,
Recurring Revenue (millions)
2024
2023
2024
2023
SaaS and PaaS fees
$
223.4
$
211.4
$
674.5
$
626.0
Maintenance fees
47.5
51.9
144.0
153.4
Recurring Revenue
$
270.9
$
263.3
$
818.5
$
779.4
New Bookings (millions)
Three Months Ended
September 30,
TTM Ended September
30,
2024
2023
2024
2023
Annual recurring revenue (ARR)
bookings
$
11.1
$
20.5
$
59.3
$
84.9
License and services bookings
67.0
54.1
281.5
224.5
Note: Amounts may not recalculate due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241107430137/en/
For more information contact: Investor Relations John
Kraft SVP, Head of Strategy and Finance 239-403-4627 /
john.kraft@aciworldwide.com
ACI Worldwide (NASDAQ:ACIW)
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