UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 8-K
___________________________
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 4, 2021
Commission File Number 0-25346
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||||||||
(305 ) 894-2200
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operation and Financial Condition.
On November 4, 2021, ACI Worldwide, Inc. (“the Company”) issued a press release announcing its financial results for the three months ended September 30, 2021. A copy of this press release is attached hereto as Exhibit 99.1.
The foregoing information (including the exhibits hereto) is being furnished under “Item 2.02 – Results of Operations and Financial Condition” and “Item 7.01 – Regulation FD Disclosure.” Such information (including the exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
The filing of this report and the furnishing of this information pursuant to Items 2.02 and 7.01 do not mean that such information is material or that disclosure of such information is required.
Item 7.01. Regulation FD Disclosure.
See “Item 2.02 – Results of Operation and Financial Condition” above.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Press Release dated November 4, 2021 | |||||
| Investor presentation materials dated November 4, 2021 | |||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ACI WORLDWIDE, INC. (Registrant) | ||||||||
| Date: November 4, 2021 | By: | /s/ SCOTT W. BEHRENS | ||||||
| Scott W. Behrens | ||||||||
| Executive Vice President, Chief Financial Officer, and Chief Accounting Officer (Principal Financial Officer) | ||||||||
Exhibit 99.1
ACI Worldwide, Inc. Reports Financial Results for the
Quarter Ended September 30, 2021
Q3 2021 revenue of $317 million
Q3 2021 net new ARR up 50% versus Q3 2020
Raising full year 2021 guidance
MIAMI, FL — November 4, 2021 — ACI Worldwide (NASDAQ: ACIW), a leading global provider of real-time digital payment software, today announced financial results for the quarter ended September 30, 2021.
“ACI delivered a solid third quarter, continuing a string of quarterly financial results within our guidance range,” said Odilon Almeida, president and CEO of ACI Worldwide.
“This has been an important year in our transformation. We have streamlined our organization, sharpened our go-to-market, and continued our focus on ensuring customers remain at the center of what we do. As we near the end of 2021, these efforts show positive results, and I am pleased with our progress,” Almeida continued.
“We have increased our full-year guidance, signed 99% of our guided 2021 full-year revenue and expect to achieve the Rule of 40 this year for the first time. All of this gives us high confidence in our increased outlook and indicates that the laser-focused execution of our three-pillar strategy – Fit-for-growth, Focused-on-growth, and Step-change value creation – is working. It sets ACI on a pathway towards predictable and profitable organic growth, shows consistent delivery of our financial promises, and makes us increasingly optimistic about our future growth prospects,” Almeida concluded.
THREE-PILLAR STRATEGY PROGRESS
Fit-for-Growth
Throughout 2020 and 2021, the company’s fit-for-growth pillar was about cementing the next steps in its evolution by changing its business approach, streamlining its organization, sharpening its go-to-market strategy, and focusing on discipline around costs and profitability improvement in an environment of COVID-19 pressures.
In optimizing the organization, ACI sourced annual cost savings of $60 million and bolstered the commercial function, increasing its customer-facing salesforce. The revamped salesforce is already generating success. For example, roughly one-third of the company’s pipeline in the Bill Payment segment originates from recent hires.
These actions contributed to adjusted EBITDA growth of 17% and increased net adjusted EBITDA margin by more than 450 basis points in 2020.
Focused-on-Growth
The company’s focused-on-growth initiatives prioritize investments in digital transformation aligned with the payment modernization agendas of customers. These initiatives continue to focus on real-time payments and investments in “last mile”, global merchants with a particular focus on innovation in Omni-commerce, and emerging markets.
These efforts have boosted sales bookings, with net new ARR bookings up 50% from the third quarter of 2021. The ARR in the Americas nearly doubled from the previous year. The company has already signed 96% of its expected revenue for the fourth quarter or 99% of the guided revenue for the full year. The company’s revised guidance projects 5% organic revenue growth and 6-7% EBITDA growth in 2021.
Step-Change, Value Creation
The company’s endeavors in its third pillar, step-change value creation through M&A, are also ongoing. The company continues to review its business portfolio and M&A opportunities with a focus on exploring all options to maximize shareholder value in the short and long term.
Q3 2021 FINANCIAL RESULTS
Net new ARR bookings were up 50% from the third quarter last year, with wins recorded in all three business segments across multiple geographies. Many of these wins are from established global, regional, and national organizations -- from corporations to central governments. Fintech companies, including cryptocurrency and Buy Now, Pay Later (BNPL) providers, are also procuring ACI services.
Recurring revenue was $245 million, up 1% from Q3 2020. Total revenue in the quarter was $317 million, up slightly from Q3 2020.
•Bank segment recurring revenue increased 2% and Bank segment adjusted EBITDA decreased 6%, versus Q3 2020.
•Merchant segment recurring revenue increased 11% and Merchant segment adjusted EBITDA decreased 25%, versus Q3 2020.
•Biller segment recurring revenue declined 2%, and Biller segment adjusted EBITDA decreased 6%, versus Q3 2020.
Total adjusted EBITDA in the quarter was $74 million compared to $87 million in Q3 2020, primarily due to the timing of non-recurring, high-margin license renewals. Net adjusted EBITDA margin was 32% in the quarter, compared to 38% in Q3 2020. Net income in the quarter of $14 million declined compared to $16 million in Q3 2020.
Cash flows from operating activities in the quarter were $40 million, down from $67 million in Q3 2020. ACI ended the quarter with $141 million in cash on hand and nearly $500 million available on its credit facility after paying down $35 million in debt in the quarter.
INCREASING 2021 GUIDANCE
For the full year of 2021, ACI now expects revenue to be in a range of $1.355 billion to $1.360 billion, up from a range of $1.335 billion to $1.345 billion. The company expects adjusted EBITDA to be in the range of $380 million to $385 million, which is at the higher end of the previous guidance range.
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS
Management will host a conference call at 8:30 am ET today 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 4968688.
About ACI Worldwide
ACI Worldwide is a global software company that provides mission-critical real-time payment solutions. Customers use our proven, scalable and secure solutions to process and manage digital payments, enable omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with local presence to drive the real-time digital transformation of payments and commerce.
© Copyright ACI Worldwide, Inc. 2021.
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.
For more information contact:
Investors
John Kraft
john.kraft@aciworldwide.com
Media
Dan Ring
dan.ring@aciworldwide.com
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 99% of the guided revenue for the full year is already signed and the achievement of the Rule of 40 this year, (ii) our high confidence in our increased outlook, (iii) indications that the laser-focused execution of our three-pillar strategy is working and that it sets ACI on a pathway towards predictable and profitable organic growth, shows consistent delivery of our financial promises, and makes us increasingly optimistic about our future growth prospects, (iv) the company’s pipeline in the Bill Payment segment, (v) the company continues to review its business portfolio and M&A opportunities with a focus on exploring all options to maximize shareholder value in the short and long term, and (vi) expectations regarding our full year 2021 revenue and adjusted EBITDA 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, the COVID-19 pandemic, increased competition, business interruptions or failure of our information technology and communication systems, may be subjected to security breaches or viruses, our ability to attract and retain senior management personnel and skilled technical employees, new members of senior management coupled with our headquarters relocation, future acquisitions, strategic partnerships and investments, integration of and achieving benefits from the Speedpay acquisition, implementation and success of our new 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, 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, 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 quarter.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands)
| September 30, 2021 | December 31, 2020 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 141,482 | $ | 165,374 | |||||||
| Receivables, net of allowances | 299,336 | 342,879 | |||||||||
| Settlement assets | 510,477 | 605,008 | |||||||||
| Prepaid expenses | 29,820 | 24,288 | |||||||||
| Other current assets | 30,420 | 17,365 | |||||||||
| Total current assets | 1,011,535 | 1,154,914 | |||||||||
| Noncurrent assets | |||||||||||
| Accrued receivables, net | 196,676 | 215,772 | |||||||||
| Property and equipment, net | 61,689 | 64,734 | |||||||||
| Operating lease right-of-use assets | 49,438 | 41,243 | |||||||||
| Software, net | 166,936 | 196,456 | |||||||||
| Goodwill | 1,280,226 | 1,280,226 | |||||||||
| Intangible assets, net | 292,659 | 321,983 | |||||||||
| Deferred income taxes, net | 64,775 | 57,476 | |||||||||
| Other noncurrent assets | 60,556 | 54,099 | |||||||||
| TOTAL ASSETS | $ | 3,184,490 | $ | 3,386,903 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 35,318 | $ | 41,223 | |||||||
| Settlement liabilities | 512,980 | 604,096 | |||||||||
| Employee compensation | 46,689 | 48,560 | |||||||||
| Current portion of long-term debt | 40,967 | 34,265 | |||||||||
| Deferred revenue | 105,725 | 95,849 | |||||||||
| Other current liabilities | 61,806 | 81,612 | |||||||||
| Total current liabilities | 803,485 | 905,605 | |||||||||
| Noncurrent liabilities | |||||||||||
| Deferred revenue | 32,912 | 33,564 | |||||||||
| Long-term debt | 1,033,353 | 1,120,742 | |||||||||
| Deferred income taxes, net | 31,951 | 40,504 | |||||||||
| Operating lease liabilities | 45,354 | 39,958 | |||||||||
| Other noncurrent liabilities | 41,881 | 39,933 | |||||||||
| Total liabilities | 1,988,936 | 2,180,306 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock | — | — | |||||||||
| Common stock | 702 | 702 | |||||||||
| Additional paid-in capital | 683,044 | 682,431 | |||||||||
| Retained earnings | 1,021,810 | 1,003,490 | |||||||||
| Treasury stock | (411,684) | (387,581) | |||||||||
| Accumulated other comprehensive loss | (98,318) | (92,445) | |||||||||
| Total stockholders’ equity | 1,195,554 | 1,206,597 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,184,490 | $ | 3,386,903 | |||||||
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, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Software as a service and platform as a service | $ | 191,456 | $ | 190,369 | $ | 583,530 | $ | 563,892 | |||||||||||||||
| License | 54,454 | 56,773 | 110,383 | 135,038 | |||||||||||||||||||
| Maintenance | 53,519 | 53,049 | 159,037 | 159,078 | |||||||||||||||||||
| Services | 17,485 | 15,692 | 50,819 | 49,270 | |||||||||||||||||||
| Total revenues | 316,914 | 315,883 | 903,769 | 907,278 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of revenue (1) | 158,712 | 158,579 | 476,811 | 471,762 | |||||||||||||||||||
| Research and development | 35,248 | 33,573 | 104,791 | 108,175 | |||||||||||||||||||
| Selling and marketing | 33,413 | 22,154 | 90,211 | 76,692 | |||||||||||||||||||
| General and administrative | 29,717 | 37,000 | 89,429 | 102,684 | |||||||||||||||||||
| Depreciation and amortization | 31,845 | 33,395 | 95,434 | 98,928 | |||||||||||||||||||
| Total operating expenses | 288,935 | 284,701 | 856,676 | 858,241 | |||||||||||||||||||
| Operating income | 27,979 | 31,182 | 47,093 | 49,037 | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Interest expense | (11,208) | (12,925) | (33,943) | (44,238) | |||||||||||||||||||
| Interest income | 2,834 | 2,927 | 8,553 | 8,781 | |||||||||||||||||||
| Other, net | (1,088) | 1,356 | (1,036) | (6,361) | |||||||||||||||||||
| Total other income (expense) | (9,462) | (8,642) | (26,426) | (41,818) | |||||||||||||||||||
| Income before income taxes | 18,517 | 22,540 | 20,667 | 7,219 | |||||||||||||||||||
| Income tax expense | 4,753 | 6,674 | 2,347 | 1,705 | |||||||||||||||||||
| Net income | $ | 13,764 | $ | 15,866 | $ | 18,320 | $ | 5,514 | |||||||||||||||
| Income per common share | |||||||||||||||||||||||
| Basic | $ | 0.12 | $ | 0.14 | $ | 0.16 | $ | 0.05 | |||||||||||||||
| Diluted | $ | 0.12 | $ | 0.13 | $ | 0.15 | $ | 0.05 | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | 117,512 | 116,558 | 117,574 | 116,217 | |||||||||||||||||||
| Diluted | 118,540 | 117,804 | 118,817 | 117,644 | |||||||||||||||||||
(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, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net income | $ | 13,764 | $ | 15,866 | $ | 18,320 | $ | 5,514 | |||||||||||||||
| Adjustments to reconcile net income to net cash flows from operating activities: | |||||||||||||||||||||||
| Depreciation | 5,130 | 6,260 | 15,838 | 18,012 | |||||||||||||||||||
| Amortization | 28,250 | 29,230 | 84,528 | 86,992 | |||||||||||||||||||
| Amortization of operating lease right-of-use assets | 2,752 | 5,344 | 7,752 | 14,145 | |||||||||||||||||||
| Amortization of deferred debt issuance costs | 1,168 | 1,197 | 3,525 | 3,613 | |||||||||||||||||||
| Deferred income taxes | (2,184) | (5,798) | (11,742) | (10,540) | |||||||||||||||||||
| Stock-based compensation expense | 6,367 | 8,061 | 20,790 | 22,943 | |||||||||||||||||||
| Other | (463) | 2,567 | (27) | 4,339 | |||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||
| Receivables | (20,801) | 12,208 | 55,953 | 41,261 | |||||||||||||||||||
| Accounts payable | (2,540) | (4,607) | (5,080) | 1,680 | |||||||||||||||||||
| Accrued employee compensation | 7,261 | 5,408 | (1,140) | 13,585 | |||||||||||||||||||
| Deferred revenue | 10,042 | (7,875) | 10,339 | 14,361 | |||||||||||||||||||
| Other current and noncurrent assets and liabilities | (9,064) | (1,332) | (51,158) | (23,847) | |||||||||||||||||||
| Net cash flows from operating activities | 39,682 | 66,529 | 147,898 | 192,058 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Purchases of property and equipment | (4,893) | (3,476) | (12,968) | (14,091) | |||||||||||||||||||
| Purchases of software and distribution rights | (4,389) | (6,499) | (20,041) | (21,556) | |||||||||||||||||||
| Net cash flows from investing activities | (9,282) | (9,975) | (33,009) | (35,647) | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Proceeds from issuance of common stock | 878 | 959 | 2,526 | 2,853 | |||||||||||||||||||
| Proceeds from exercises of stock options | 208 | 5,396 | 7,252 | 6,518 | |||||||||||||||||||
| Repurchase of stock-based compensation awards for tax withholdings | (37) | (26) | (14,833) | (11,150) | |||||||||||||||||||
| Repurchases of common stock | — | — | (39,411) | (28,881) | |||||||||||||||||||
| Proceeds from revolving credit facility | — | — | — | 30,000 | |||||||||||||||||||
| Repayment of revolving credit facility | (25,000) | (40,000) | (55,000) | (109,000) | |||||||||||||||||||
| Repayment of term portion of credit agreement | (9,737) | (9,737) | (29,212) | (29,212) | |||||||||||||||||||
| Payments on or proceeds from other debt, net | (1,915) | (5,358) | (10,187) | (10,044) | |||||||||||||||||||
| Net cash flows from financing activities | (35,603) | (48,766) | (138,865) | (148,916) | |||||||||||||||||||
| Effect of exchange rate fluctuations on cash | 472 | (3,166) | 84 | 4,952 | |||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | (4,731) | 4,622 | (23,892) | 12,447 | |||||||||||||||||||
| Cash and cash equivalents, beginning of period | 146,213 | 129,223 | 165,374 | 121,398 | |||||||||||||||||||
| Cash and cash equivalents, end of period | $ | 141,482 | $ | 133,845 | $ | 141,482 | $ | 133,845 | |||||||||||||||
| Adjusted EBITDA (millions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net income | $ | 13.8 | $ | 15.9 | $ | 18.3 | $ | 5.5 | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Income tax expense | 4.7 | 6.7 | 2.3 | 1.7 | |||||||||||||||||||
| Net interest expense | 8.4 | 10.0 | 25.4 | 35.5 | |||||||||||||||||||
| Net other (income) expense | 1.1 | (1.4) | 1.0 | 6.4 | |||||||||||||||||||
| Depreciation expense | 5.1 | 6.3 | 15.9 | 18.0 | |||||||||||||||||||
| Amortization expense | 28.2 | 29.2 | 84.5 | 87.0 | |||||||||||||||||||
| Non-cash stock-based compensation expense | 6.4 | 8.1 | 20.8 | 22.9 | |||||||||||||||||||
| Adjusted EBITDA before significant transaction-related expenses | 67.7 | 74.8 | 168.2 | 177.0 | |||||||||||||||||||
| Significant transaction-related expenses: | |||||||||||||||||||||||
| Employee related actions | 4.4 | 8.0 | 8.1 | 16.2 | |||||||||||||||||||
| Facility closures | — | 1.9 | — | 3.7 | |||||||||||||||||||
| Other | 1.6 | 2.4 | 2.5 | 5.9 | |||||||||||||||||||
| Adjusted EBITDA | $ | 73.7 | $ | 87.1 | $ | 178.8 | $ | 202.8 | |||||||||||||||
| Revenue, net of interchange: | |||||||||||||||||||||||
| Revenue | $ | 316.9 | $ | 315.9 | $ | 903.8 | $ | 907.3 | |||||||||||||||
| Interchange | 87.8 | 88.2 | 262.6 | 251.8 | |||||||||||||||||||
| Revenue, net of interchange | $ | 229.1 | $ | 227.7 | $ | 641.2 | $ | 655.5 | |||||||||||||||
| Net adjusted EBITDA margin | 32 | % | 38 | % | 28 | % | 31 | % | |||||||||||||||
| Segment Information (millions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Banks | $ | 131.7 | $ | 125.7 | $ | 341.7 | $ | 356.9 | |||||||||||||||
| Merchants | 39.0 | 40.8 | 115.1 | 109.9 | |||||||||||||||||||
| Billers | 146.2 | 149.4 | 447.0 | 440.5 | |||||||||||||||||||
| Total | $ | 316.9 | $ | 315.9 | $ | 903.8 | $ | 907.3 | |||||||||||||||
| Recurring revenue | |||||||||||||||||||||||
| Banks | $ | 63.6 | $ | 62.2 | $ | 189.6 | $ | 187.0 | |||||||||||||||
| Merchants | 35.2 | 31.7 | 106.0 | 95.5 | |||||||||||||||||||
| Billers | 146.2 | 149.5 | 446.9 | 440.4 | |||||||||||||||||||
| Total | $ | 245.0 | $ | 243.4 | $ | 742.6 | $ | 723.0 | |||||||||||||||
| Segment adjusted EBITDA | |||||||||||||||||||||||
| Banks | $ | 67.6 | $ | 71.7 | $ | 159.3 | $ | 182.5 | |||||||||||||||
| Merchants | 14.2 | 19.0 | 42.0 | 38.2 | |||||||||||||||||||
| Billers | 32.0 | 33.9 | 100.6 | 98.4 | |||||||||||||||||||
| EPS Impact of Non-Cash and Significant Transaction-Related Items (millions) | Three Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| EPS Impact | $ in Millions (Net of Tax) | EPS Impact | $ in Millions (Net of Tax) | ||||||||||||||||||||
| GAAP net income | $ | 0.12 | $ | 13.8 | $ | 0.13 | $ | 15.9 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Significant transaction-related expenses | 0.04 | 4.5 | 0.08 | 9.3 | |||||||||||||||||||
| Amortization of acquisition-related intangibles | 0.06 | 7.0 | 0.06 | 7.1 | |||||||||||||||||||
| Amortization of acquisition-related software | 0.05 | 6.0 | 0.07 | 8.2 | |||||||||||||||||||
| Non-cash stock-based compensation | 0.04 | 4.8 | 0.05 | 6.1 | |||||||||||||||||||
| Total adjustments | 0.19 | 22.3 | 0.26 | 30.7 | |||||||||||||||||||
| Diluted EPS adjusted for non-cash and significant transaction-related items | $ | 0.31 | $ | 36.1 | $ | 0.39 | $ | 46.6 | |||||||||||||||
| EPS Impact of Non-Cash and Significant Transaction-Related Items (millions) | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| EPS Impact | $ in Millions (Net of Tax) | EPS Impact | $ in Millions (Net of Tax) | ||||||||||||||||||||
| GAAP net income | $ | 0.15 | $ | 18.3 | $ | 0.05 | $ | 5.5 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Significant transaction-related expenses | 0.07 | 8.0 | 0.17 | 19.7 | |||||||||||||||||||
| Amortization of acquisition-related intangibles | 0.18 | 21.1 | 0.18 | 21.1 | |||||||||||||||||||
| Amortization of acquisition-related software | 0.16 | 19.1 | 0.21 | 24.3 | |||||||||||||||||||
| Non-cash stock-based compensation | 0.13 | 15.8 | 0.15 | 17.4 | |||||||||||||||||||
| Total adjustments | 0.54 | 64.0 | 0.71 | 82.5 | |||||||||||||||||||
| Diluted EPS adjusted for non-cash and significant transaction-related items | $ | 0.69 | $ | 82.3 | $ | 0.76 | $ | 88.0 | |||||||||||||||
| Recurring Revenue (millions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| SaaS and PaaS fees | $ | 191.5 | $ | 190.4 | $ | 583.5 | $ | 563.9 | |||||||||||||||
| Maintenance fees | 53.5 | 53.0 | 159.1 | 159.1 | |||||||||||||||||||
| Recurring revenue | $ | 245.0 | $ | 243.4 | $ | 742.6 | $ | 723.0 | |||||||||||||||
| Annual Recurring Revenue (ARR) Bookings (millions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| ARR bookings | $ | 22.4 | $ | 15.0 | $ | 49.7 | $ | 49.9 | |||||||||||||||
Q3 2021 Earnings Presentation November 4, 2021 Exhibit 99.2
Private Securities Litigation Reform Act of 1995 Safe Harbor for Forward-Looking Statements 2 This presentation contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. A discussion of these forward-looking statements and risk factors that may affect them is set forth at the end of this presentation. The Company assumes no obligation to update any forward-looking statement in this presentation, except as required by law.
ACI Delivers Mission-Critical Payment Solutions We combine our global footprint with local presence to drive the real-time digital transformation of payments and commerce. ACI Worldwide is a global software company that provides mission-critical real-time payment software to corporations. Customers use our proven, scalable and secure solutions to: Process and manage digital payments Enable omni-commerce payments Present and process bill payments Manage fraud and risk Confidential 3
Three-Pillar Strategy Re-Cap 4 Fit for Growth Focused on Growth Step-Change Value Creation We are organized and operating with a strong focus on growth by: • Adopting a simpler, flatter and more agile organizational structure • Building a powerful, best-in-class sales engine • Fewer layers between business leaders and customers We are focusing investments on the biggest growth opportunities and continuing to accelerate the digital transformation of payments by: • Increasing investment in real-time payments, global merchants and emerging markets • Protecting and growing our issuing, acquiring and bill payment businesses We continue to build on our successful history of mergers and acquisitions by: • Driving inorganic value creation through acquisitions and divestitures aligned with our areas of focus and overall strategy
3Q Results Highlights 5 3Q Results Segment Results Balance Sheet Recurring revenue $245M, +1% from Q3 2020 Net new ARR growth of 50% Total revenue $317M, up slightly from Q3 2020 Banking recurring revenue +2% Merchant recurring revenue +11% Biller recurring revenue -2%, impacted by tax payment deadline changes $141M cash balance Credit facility of $500M, Repaid $35M of debt in 3Q $1.1B debt • Net debt ratio of 2.8x • On track to achieve 2021YE net debt ratio of 2.5x Adjusted EBITDA of $74M, down from Q3 2020, due to mix
FY2021 Guidance 99% of FY 2021 revenue guidance already signed 6 Increasing 2021 Revenue Guidance Expect the high end of 2021 adjusted EBITDA guidance Revenue estimated at $1.355B - $1.360B Adjusted EBITDA estimated at $380M - $385M Up from $1.335B to $1.345B Up from $375M - $385M Expect to achieve Rule of 40 in 2021 for the first time Score of 42%
2021 Quarter 3: Key Wins Across the World 7 North and Latin America Africa Middle East Asia Banks & Intermediaries Europe Merchant Biller Traction in mature and emerging markets
2021: Recognition + Patent in the Quarter Leading global industry research firms recognize ACI’s solutions leadership 8 Best-in-Class Ranking 2021 Aite Matrix: Leading U.S. Cash Management Vendors 3 Juniper Research Awards Future Digital Awards 2021 Fintech & Payment Technology Leader Quadrant Knowledge Solutions Leader in Corporate Digital Banking Platforms Celent Incremental Learning Technology – Full Patent Approval
10 Three Months Ended September 30, Nine Months Ended September 30, Recurring Revenue (millions) 2021 2020 2021 2020 SaaS and PaaS fees $ 191.5 $ 190.4 $ 583.5 $ 563.9 Maintenance fees 53.5 53.0 159.1 159.1 Recurring Revenue $ 245.0 $ 243.4 $ 742.6 $ 723.0 Three Months Ended September 30, Nine Months Ended September 30, Annual Recurring Revenue (ARR) Bookings (millions) 2021 2020 2021 2020 ARR Bookings $ 22.4 $ 15.0 $ 49.7 $ 49.9 Supplemental Financial Data
11 Adjusted EBITDA (millions) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Net income $ 13.8 $ 15.9 $ 18.3 $ 5.5 Plus: Income tax expense 4.7 6.7 2.3 1.7 Net interest expense 8.4 10.0 25.4 35.5 Net other (income) expense 1.1 (1.4) 1.0 6.4 Depreciation expense 5.1 6.3 15.9 18.0 Amortization expense 28.2 29.2 84.5 87.0 Non-cash stock-based compensation expense 6.4 8.1 20.8 22.9 Adjusted EBITDA before significant transaction-related expenses 67.7 74.8 168.2 177.0 Significant transaction-related expenses: Employee related 4.4 8.0 8.1 16.2 Facility closures — 1.9 — 3.7 Other 1.6 2.4 2.5 5.9 Adjusted EBITDA $ 73.7 $ 87.1 $ 178.8 $ 202.8 Revenue, net of interchange Revenue $ 316.9 $ 315.9 $ 903.8 $ 907.3 Interchange 87.8 88.2 262.6 251.8 Revenue, net of interchange $ 229.1 $ 227.7 $ 641.2 $ 655.5 Net Adjusted EBITDA Margin 32 % 38 % 28 % 31 % Supplemental Financial Data
12 Segment Information (millions) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Revenue Banks $ 131.7 $ 125.7 $ 341.7 $ 356.9 Merchants 39.0 40.8 115.1 109.9 Billers 146.2 149.4 447.0 440.5 Total Revenue $ 316.9 $ 315.9 $ 903.8 $ 907.3 Recurring Revenue Banks $ 63.6 $ 62.2 $ 189.6 $ 187.0 Merchants 35.2 31.7 106.0 95.5 Billers 146.2 149.5 446.9 440.4 Total Recurring Revenue $ 245.0 $ 243.4 $ 742.6 $ 723.0 Segment Adjusted EBITDA Banks $ 67.6 $ 71.7 $ 159.3 $ 182.5 Merchants 14.2 19.0 42.0 38.2 Billers 32.0 33.9 100.6 98.4 Supplemental Financial Data
13 EPS Impact of Non-cash and Significant Transaction-related Items (millions) Three Months Ended September 30, 2021 2020 EPS Impact $ in Millions (Net of Tax) EPS Impact $ in Millions (Net of Tax) GAAP net income $ 0.12 $ 13.8 $ 0.13 $ 15.9 Adjusted for: Significant transaction-related expenses 0.04 4.5 0.08 9.3 Amortization of acquisition-related intangibles 0.06 7.0 0.06 7.1 Amortization of acquisition-related software 0.05 6.0 0.07 8.2 Non-cash stock-based compensation 0.04 4.8 0.05 6.1 Total adjustments 0.19 22.3 0.26 30.7 Diluted EPS adjusted for non-cash and significant transaction- related items $ 0.31 $ 36.1 $ 0.39 $ 46.6 EPS Impact of Non-cash and Significant Transaction-related Items (millions) Nine Months Ended September 30, 2021 2020 EPS Impact $ in Millions (Net of Tax) EPS Impact $ in Millions (Net of Tax) GAAP net income $ 0.15 $ 18.3 $ 0.05 $ 5.5 Adjusted for: Significant transaction-related expenses 0.07 8.0 0.17 19.7 Amortization of acquisition-related intangibles 0.18 21.1 0.18 21.1 Amortization of acquisition-related software 0.16 19.1 0.21 24.3 Non-cash stock-based compensation 0.13 15.8 0.15 17.4 Total adjustments 0.54 64.0 0.71 82.5 Diluted EPS adjusted for non-cash and significant transaction- related items $ 0.69 $ 82.3 $ 0.76 $ 88.0 Supplemental Financial Data
14 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 non-cash 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 non-cash 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 service fees and maintenance fees. Recurring revenue should be considered in addition to, rather than as a substitute for, total revenue. Non-GAAP Financial Measures
15 This presentation 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 presentation include, but are not limited to, statements regarding (i) expectations to achieve the Rule of 40 in 2021, (ii) expectations that 99% of full-year 2021 projected revenue already signed, (iii) expectations to achieve 2021YE net debt ratio of 2.5x, and (iv) expectations regarding full year 2021 revenue and adjusted EBITDA 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, the COVID-19 pandemic, increased competition, business interruptions or failure of our information technology and communication systems, may be subjected to security breaches or viruses, our ability to attract and retain senior management personnel and skilled technical employees, new members of senior management coupled with our headquarters relocation, future acquisitions, strategic partnerships and investments, integration of and achieving benefits from the Speedpay acquisition, implementation and success of our new 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, 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, 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. Forward Looking Statements