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ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended March 31, 2022

May 5, 2022

Revenue of $323 million, up 13% versus Q1 2021

Adjusted EBITDA of $68 million, up 50% versus Q1 2021

New ARR bookings of $21 million, up 117% versus Q1 2021

Net income of $16 million

Repurchased 1.1 million shares in the quarter

Reiterating guidance for full-year 2022

MIAMI--(BUSINESS WIRE)--May 5, 2022-- ACI Worldwide (NASDAQ: ACIW), the global leader in mission-critical, real-time payments software, announced financial results today for the quarter ended March 31, 2022. ACI delivered a strong first quarter, with revenue growth of 13% and new ARR bookings up 117% versus 2021.

“We continue to execute on the rigorous and disciplined management processes implemented in the last two years, making our business more predictable and our growth momentum clear,” said Odilon Almeida, president and CEO of ACI Worldwide.

“I am pleased with our progress and our financial flexibility, which support short- and long-term profitable growth while continuing our share buy-back program,” Almeida continued.

“This quarter’s revenue growth and significant new business wins demonstrate continued execution of our Fit for Growth and Focused on Growth strategic pillars. Our Step-Change Value Creation pillar is progressing as well,” he concluded.

FINANCIAL SUMMARY

In Q1 2022, revenue was $323 million, up 13%, or 14% on a constant currency basis, from Q1 2021. Net income was $16 million, up from a net loss of $2 million in Q1 2021. Adjusted EBITDA in Q1 2022 was $68 million, up 50%, or 49% on a constant currency basis, from Q1 2021. Net adjusted EBITDA margin in Q1 2022 was 29% compared to 23% in Q1 2021. Q1 total new ARR bookings of $21 million were up 117% over Q1 2021.

  • Bank segment revenue increased 38%, or 40% on a constant currency basis, and bank segment adjusted EBITDA increased 74% on a reported and constant currency basis, versus Q1 2021.
  • Merchant segment revenue increased 6%, or 8% on a constant currency basis, and merchant segment adjusted EBITDA was flat, or down 3% on a constant currency basis, versus Q1 2021.
  • Biller segment revenue was flat on a reported and constant currency basis, and the biller segment adjusted EBITDA was down 23%, or down 22% on a constant currency basis, versus Q1 2021.

ACI ended the quarter with $115 million in cash on hand and a debt balance of $1 billion, which represents a net debt leverage ratio of 2.4x. The company repurchased 1.1 million shares for $38 million during the quarter. As of March 31, 2022, ACI has $178 million remaining on its share repurchase authorization.

2022 FULL-YEAR AND Q2 GUIDANCE

We reaffirm our guidance for the full year of 2022. We expect revenue growth to be in the mid-single digits on a constant currency basis, or in the range of $1.415 billion to $1.435 billion. We expect adjusted EBITDA to be in a range of $400 million to $415 million with net adjusted EBITDA margin expansion.

We expect Q2 2022 revenue to be between $325 million to $345 million and adjusted EBITDA of $55 million to $75 million. This excludes one-time charges to move our European data centers to the public cloud.

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 webcast of the teleconference at http://investor.aciworldwide.com/ or use the following number for dial-in participation: toll-free (866) 914-7436. Please provide your name, the conference name of ACI Worldwide, Inc. and conference ID 9771443.

About ACI Worldwide

ACI Worldwide is the global leader in mission-critical, real-time payments software. Our proven, secure and scalable software solutions enable leading corporations, fintechs, financial disruptors and merchants 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. 2022.

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.

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) expectations that the rigorous and disciplined management processes implemented in the last two years is making our business more predictable and our growth momentum clear, (ii) our progress and our financial flexibility, which support short- and long-term profitable growth while continuing our share buy-back program, (iii) expectations that our Step-Change Value Creation pillar is progressing as well, (iv) expectations for full year 2022 revenue, adjusted EBITDA, net adjusted EBITDA margin, and (iv) our expectations for Q2 2022 revenue and adjusted EBITDA.

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, implementation and success of our Three Pillar 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, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, 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 regulations, our involvement in investigations, lawsuits and other expense and time-consuming legal proceedings, exposure to unknown tax liabilities, 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, potential adverse effects from the impending replacement of LIBOR, the COVID-19 pandemic, and events outside of our control including natural disasters, wars, and outbreaks of disease. 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)

 

March 31, 2022

 

December 31, 2021

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

114,754

 

 

$

122,059

 

Receivables, net of allowances

 

310,778

 

 

 

320,405

 

Settlement assets

 

531,804

 

 

 

452,396

 

Prepaid expenses

 

33,465

 

 

 

24,698

 

Other current assets

 

18,926

 

 

 

17,876

 

Total current assets

 

1,009,727

 

 

 

937,434

 

Noncurrent assets

 

 

 

Accrued receivables, net

 

276,731

 

 

 

276,164

 

Property and equipment, net

 

60,770

 

 

 

63,050

 

Operating lease right-of-use assets

 

47,161

 

 

 

47,825

 

Software, net

 

146,952

 

 

 

157,782

 

Goodwill

 

1,280,226

 

 

 

1,280,226

 

Intangible assets, net

 

273,527

 

 

 

283,004

 

Deferred income taxes, net

 

51,243

 

 

 

50,778

 

Other noncurrent assets

 

64,108

 

 

 

62,478

 

TOTAL ASSETS

$

3,210,445

 

 

$

3,158,741

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

38,929

 

 

$

41,312

 

Settlement liabilities

 

531,148

 

 

 

451,575

 

Employee compensation

 

32,316

 

 

 

51,379

 

Current portion of long-term debt

 

50,778

 

 

 

45,870

 

Deferred revenue

 

92,518

 

 

 

84,425

 

Other current liabilities

 

67,923

 

 

 

79,594

 

Total current liabilities

 

813,612

 

 

 

754,155

 

Noncurrent liabilities

 

 

 

Deferred revenue

 

27,790

 

 

 

25,925

 

Long-term debt

 

1,036,380

 

 

 

1,019,872

 

Deferred income taxes, net

 

32,519

 

 

 

36,122

 

Operating lease liabilities

 

41,718

 

 

 

43,346

 

Other noncurrent liabilities

 

33,759

 

 

 

34,544

 

Total liabilities

 

1,985,778

 

 

 

1,913,964

 

Commitments and contingencies

 

 

 

Stockholders’ equity

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

702

 

 

 

702

 

Additional paid-in capital

 

685,354

 

 

 

688,313

 

Retained earnings

 

1,146,771

 

 

 

1,131,281

 

Treasury stock

 

(506,513

)

 

 

(475,972

)

Accumulated other comprehensive loss

 

(101,647

)

 

 

(99,547

)

Total stockholders’ equity

 

1,224,667

 

 

 

1,244,777

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

3,210,445

 

 

$

3,158,741

 

ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)

 

 

Three Months Ended March 31,

 

2022

 

2021

Revenues

 

 

 

Software as a service and platform as a service

$

194,562

 

 

$

195,746

 

License

 

60,285

 

 

 

21,202

 

Maintenance

 

51,418

 

 

 

52,363

 

Services

 

16,815

 

 

 

15,875

 

Total revenues

 

323,080

 

 

 

285,186

 

Operating expenses

 

 

 

Cost of revenue (1)

 

166,286

 

 

 

159,485

 

Research and development

 

37,807

 

 

 

34,514

 

Selling and marketing

 

34,608

 

 

 

28,138

 

General and administrative

 

25,875

 

 

 

27,775

 

Depreciation and amortization

 

30,838

 

 

 

31,584

 

Total operating expenses

 

295,414

 

 

 

281,496

 

Operating income

 

27,666

 

 

 

3,690

 

Other income (expense)

 

 

 

Interest expense

 

(10,894

)

 

 

(11,475

)

Interest income

 

3,159

 

 

 

2,854

 

Other, net

 

2,250

 

 

 

(1,382

)

Total other income (expense)

 

(5,485

)

 

 

(10,003

)

Income (loss) before income taxes

 

22,181

 

 

 

(6,313

)

Income tax expense (benefit)

 

6,691

 

 

 

(4,368

)

Net income (loss)

$

15,490

 

 

$

(1,945

)

Income (loss) per common share

 

 

 

Basic

$

0.13

 

 

$

(0.02

)

Diluted

$

0.13

 

 

$

(0.02

)

Weighted average common shares outstanding

 

 

 

Basic

 

115,287

 

 

 

117,491

 

Diluted

 

116,098

 

 

 

117,491

 

(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 March 31,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net income (loss)

$

15,490

 

 

$

(1,945

)

Adjustments to reconcile net income (loss) to net cash flows from operating activities:

 

 

 

Depreciation

 

4,981

 

 

 

5,416

 

Amortization

 

26,508

 

 

 

28,167

 

Amortization of operating lease right-of-use assets

 

2,716

 

 

 

2,345

 

Amortization of deferred debt issuance costs

 

1,153

 

 

 

1,182

 

Deferred income taxes

 

(3,367

)

 

 

(6,078

)

Stock-based compensation expense

 

7,958

 

 

 

6,703

 

Other

 

601

 

 

 

(106

)

Changes in operating assets and liabilities:

 

 

 

Receivables

 

9,660

 

 

 

76,135

 

Accounts payable

 

(2,748

)

 

 

(2,808

)

Accrued employee compensation

 

(19,138

)

 

 

(12,725

)

Deferred revenue

 

9,949

 

 

 

8,152

 

Other current and noncurrent assets and liabilities

 

(24,889

)

 

 

(34,681

)

Net cash flows from operating activities

 

28,874

 

 

 

69,757

 

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(2,280

)

 

 

(4,346

)

Purchases of software and distribution rights

 

(6,207

)

 

 

(8,053

)

Net cash flows from investing activities

 

(8,487

)

 

 

(12,399

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of common stock

 

906

 

 

 

1,052

 

Proceeds from exercises of stock options

 

1,022

 

 

 

2,799

 

Repurchase of stock-based compensation awards for tax withholdings

 

(5,537

)

 

 

(14,206

)

Repurchases of common stock

 

(37,860

)

 

 

 

Proceeds from revolving credit facility

 

40,000

 

 

 

 

Repayment of revolving credit facility

 

(10,000

)

 

 

(15,000

)

Repayment of term portion of credit agreement

 

(9,738

)

 

 

(9,738

)

Payments on or proceeds from other debt, net

 

(4,186

)

 

 

(3,600

)

Net decrease in settlement assets and liabilities

 

(605

)

 

 

(71,264

)

Net cash flows from financing activities

 

(25,998

)

 

 

(109,957

)

Effect of exchange rate fluctuations on cash

 

(2,464

)

 

 

(41

)

Net decrease in cash and cash equivalents

 

(8,075

)

 

 

(52,640

)

Cash and cash equivalents, including settlement deposits, beginning of period

 

184,142

 

 

 

265,382

 

Cash and cash equivalents, including settlement deposits, end of period

$

176,067

 

 

$

212,742

 

Reconciliation of cash and cash equivalents to the Consolidated Balance Sheets

 

 

 

Cash and cash equivalents

$

114,754

 

 

$

184,364

 

Settlement deposits

 

61,313

 

 

 

28,378

 

Total cash and cash equivalents

$

176,067

 

 

$

212,742

 

 

Three Months Ended March 31,

Adjusted EBITDA (millions)

2022

2021

Net income (loss)

$

15.5

 

 

$

(1.9

)

Plus:

 

 

 

Income tax expense (benefit)

 

6.7

 

 

 

(4.4

)

Net interest expense

 

7.7

 

 

 

8.6

 

Net other income (expense)

 

(2.3

)

 

 

1.4

 

Depreciation expense

 

5.0

 

 

 

5.4

 

Amortization expense

 

26.5

 

 

 

28.2

 

Non-cash stock-based compensation expense

 

8.0

 

 

 

6.7

 

Adjusted EBITDA before significant transaction-related expenses

$

67.1

 

 

$

44.0

 

Significant transaction-related expenses:

 

 

 

Employee related actions

$

 

 

$

0.8

 

Other

 

0.5

 

 

 

0.4

 

Adjusted EBITDA

$

67.6

 

 

$

45.2

 

Revenue, net of interchange:

 

 

 

Revenue

$

323.1

 

 

$

285.2

 

Interchange

 

93.2

 

 

 

87.3

 

Revenue, net of interchange

$

229.9

 

 

$

197.9

 

 

 

 

 

Net Adjusted EBITDA Margin

 

29

%

 

 

23

%

 

Three Months Ended March 31,

Segment Information (millions)

2022

 

2021

Revenue

 

 

 

Banks

$

132.2

 

$

95.9

Merchants

 

41.0

 

 

38.7

Billers

 

149.9

 

 

150.6

Total

$

323.1

 

$

285.2

Recurring Revenue

 

 

 

Banks

$

61.3

 

$

62.3

Merchants

 

34.8

 

 

35.3

Billers

 

149.9

 

 

150.5

Total

$

246.0

 

$

248.1

Segment Adjusted EBITDA

 

 

 

Banks

$

64.7

 

$

37.2

Merchants

 

14.7

 

 

14.7

Billers

 

26.4

 

 

34.0

 

Three Months Ended March 31,

 

2022

 

2021

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)

$

0.13

 

$

15.5

 

$

(0.02

)

 

$

(1.9

)

Adjusted for:

 

 

 

 

 

 

 

Significant transaction-related expenses

 

 

 

0.4

 

 

0.01

 

 

 

0.9

 

Amortization of acquisition-related intangibles

 

0.06

 

 

7.0

 

 

0.06

 

 

 

7.0

 

Amortization of acquisition-related software

 

0.04

 

 

5.0

 

 

0.06

 

 

 

6.7

 

Non-cash stock-based compensation

 

0.05

 

 

6.0

 

 

0.04

 

 

 

5.1

 

Total adjustments

$

0.15

 

$

18.4

 

$

0.17

 

 

$

19.7

 

Diluted EPS adjusted for non-cash and significant transaction-related items

$

0.28

 

$

33.9

 

$

0.15

 

 

$

17.8

 

 

Three Months Ended March 31,

Recurring Revenue (millions)

2022

 

2021

SaaS and PaaS fees

$

194.6

 

$

195.7

Maintenance fees

 

51.4

 

 

52.4

Recurring Revenue

$

246.0

 

$

248.1

Annual Recurring Revenue (ARR) Bookings (millions)

Three Months Ended March 31,

 

2022

 

2021

ARR bookings

$

21.1

 

$

9.7

 

Investors
John Kraft
SVP, Head of Strategy and Finance
john.kraft@aciworldwide.com

Source: ACI Worldwide