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 2, 2022
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) | ||||||||||||||||
(239 ) 403-4660
(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:
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 2, 2022, ACI Worldwide, Inc. (“the Company”) issued a press release announcing its financial results for the three months ended September 30, 2022. 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 2, 2022 | |||||
| Investor presentation materials dated November 2, 2022 | |||||
| 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 2, 2022 | 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, 2022
Q3 Highlights
Revenue of $307 million, up 1% adjusted for FX and Corporate Online Banking divestiture, versus Q3 2021
Net income of $23 million
Repurchased 1.2 million shares
Reaffirming full-year 2022 revenue guidance on a constant currency basis
MIAMI, FL — November 2, 2022 — ACI Worldwide (NASDAQ: ACIW), a global leader in mission-critical, real-time payments software, announced financial results today for the quarter ending September 30, 2022. ACI delivered revenue of $307 million and adjusted EBITDA of $46 million. New ARR1 bookings were up 35% versus Q3 2021 and up 40% on a year-to-date basis.
"In the third quarter, we again delivered revenue in line with guidance and saw notable bookings success across all segments, providing visibility into future revenue growth," said Odilon Almeida, president and CEO of ACI Worldwide. "However, inflationary pressures on the interchange component of our Biller segment and foreign exchange rates are impacting our EBITDA in the near term. Our actions to mitigate the impact of these pressures, especially the Biller interchange component, are beginning to pay off. Despite these challenging market conditions, we are pleased to maintain our full-year revenue guidance on a constant currency basis."
Almeida continued, "The disciplined execution of ACI's three-pillar strategy remains intrinsic to our performance and provides the flexibility to invest in growth and return capital to shareholders through share repurchases. Our continued strong new ARR bookings and new business momentum across our segments enhance our confidence in our accelerating growth trajectory. We are also on track to launch our next-generation, real-time payments cloud platform in 2023, driving new growth across our business segments."
FINANCIAL SUMMARY
In Q3 2022, revenue was $307 million, down 3%, or up 1% compared to Q3 2021 adjusted for FX and the divestiture of ACI's Corporate Online Banking division, which was completed in September. Adjusted EBITDA in Q3 was $46 million, down 38%, compared to Q3 2021, or 36% adjusted for FX and the divestiture2. Net adjusted EBITDA margin in Q3 2022 was 22%, or 21% adjusted for FX and the divestiture2. Q3 new ARR bookings of $30 million were up 35% compared to Q3 2021 and up 40% year to date.
•Bank segment revenue declined 11%, or 4% adjusted for FX and the divestiture2; segment adjusted EBITDA decreased 26%, or 23% adjusted for FX and the divestiture2, versus Q3 2021.
•Merchant segment revenue decreased 9%, or 3% adjusted for FX; segment adjusted EBITDA was down 31%, or 26% adjusted for FX, versus Q3 2021.
•Biller segment revenue grew 5% and segment adjusted EBITDA was down 18%, versus Q3 2021.
ACI ended the quarter with $135 million cash on hand and a debt balance of $1 billion, representing a net debt leverage ratio of 2.3x. The company has repurchased 3.2 million shares for $91 million year-to-date. As of September 30, 2022, ACI has $125 million remaining on its share repurchase authorization and expects to use approximately 50% of its cash flow to complete additional share repurchases over the remainder of the year.
REITERATING REVENUE GUIDANCE FOR 2022 ON A CONSTANT CURRENCY BASIS
On a constant currency basis, ACI is reiterating its full-year 2022 guidance provided on September 1, 2022. The company is adjusting its revenue guidance only to account for FX fluctuations. ACI expects 2022 revenue to be in a range of $1.39 billion to $1.405 billion.
Despite the solid revenue performance, FX and inflation are pressuring EBITDA in the near term. The impact of inflation is limited to the interchange component of the company's Biller segment. As a result, ACI expects full-year 2022 adjusted EBITDA to be in the range of $365 million to $380 million.
1 “ARR”' is annual recurring revenue expected to be generated from new accounts, new applications and add-on sales bookings contracts signed in the quarter
2 Corporate Online Banking divestiture
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS
Today, management will host a conference call at 8:00 AM ET to discuss these results. Interested persons may access a real-time teleconference webcast at http://investor.aciworldwide.com/ or use the following number for dial-in participation: toll-free 1 (888) 660-6377; Conference ID: 3153574. Please provide your name and the conference name of ACI Worldwide, Inc.
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, financial disruptors and merchants to process and manage digital payments, power omni-commerce payments, present and process bill payments, and address 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.
For more information contact:
Investors
John Kraft
SVP, Head of Strategy and Finance
john.kraft@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.
•*ARR: Annual recurring revenue expected to be generated from new accounts, new applications, and add-on sales bookings contracts signed in the quarter.
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 regarding notable bookings success across all segments, providing visibility into future revenue growth, (ii) expectations regarding inflationary pressures on the interchange component of our Biller segment and foreign exchange rates impacting our EBITDA in the near term, (iii) expectations that our actions to mitigate the impact of these pressures, especially the biller interchange component, are beginning to pay off, (iv) expectations that our continued strong new ARR bookings and new business momentum across our segments enhance our confidence in our accelerating growth trajectory, (v) expectations that the launch of our next generation real-time payments cloud platform will drive new growth across our business segments and (vi) expectations regarding 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, 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)
| September 30, 2022 | December 31, 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 134,799 | $ | 122,059 | |||||||
| Receivables, net of allowances | 302,301 | 320,405 | |||||||||
| Settlement assets | 727,754 | 452,396 | |||||||||
| Prepaid expenses | 29,766 | 24,698 | |||||||||
| Other current assets | 16,342 | 17,876 | |||||||||
| Total current assets | 1,210,962 | 937,434 | |||||||||
| Noncurrent assets | |||||||||||
| Accrued receivables, net | 248,285 | 276,164 | |||||||||
| Property and equipment, net | 54,328 | 63,050 | |||||||||
| Operating lease right-of-use assets | 37,916 | 47,825 | |||||||||
| Software, net | 134,942 | 157,782 | |||||||||
| Goodwill | 1,226,026 | 1,280,226 | |||||||||
| Intangible assets, net | 235,053 | 283,004 | |||||||||
| Deferred income taxes, net | 55,454 | 50,778 | |||||||||
| Other noncurrent assets | 60,174 | 62,478 | |||||||||
| TOTAL ASSETS | $ | 3,263,140 | $ | 3,158,741 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 38,227 | $ | 41,312 | |||||||
| Settlement liabilities | 727,237 | 451,575 | |||||||||
| Employee compensation | 43,637 | 51,379 | |||||||||
| Current portion of long-term debt | 60,603 | 45,870 | |||||||||
| Deferred revenue | 53,163 | 84,425 | |||||||||
| Other current liabilities | 75,107 | 79,594 | |||||||||
| Total current liabilities | 997,974 | 754,155 | |||||||||
| Noncurrent liabilities | |||||||||||
| Deferred revenue | 22,440 | 25,925 | |||||||||
| Long-term debt | 947,750 | 1,019,872 | |||||||||
| Deferred income taxes, net | 30,465 | 36,122 | |||||||||
| Operating lease liabilities | 32,235 | 43,346 | |||||||||
| Other noncurrent liabilities | 34,060 | 34,544 | |||||||||
| Total liabilities | 2,064,924 | 1,913,964 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock | — | — | |||||||||
| Common stock | 702 | 702 | |||||||||
| Additional paid-in capital | 697,763 | 688,313 | |||||||||
| Retained earnings | 1,183,230 | 1,131,281 | |||||||||
| Treasury stock | (555,753) | (475,972) | |||||||||
| Accumulated other comprehensive loss | (127,726) | (99,547) | |||||||||
| Total stockholders’ equity | 1,198,216 | 1,244,777 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,263,140 | $ | 3,158,741 | |||||||
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, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Software as a service and platform as a service | $ | 195,540 | $ | 191,456 | $ | 597,080 | $ | 583,530 | |||||||||||||||
| License | 43,661 | 54,454 | 168,260 | 110,383 | |||||||||||||||||||
| Maintenance | 49,163 | 53,519 | 151,143 | 159,037 | |||||||||||||||||||
| Services | 18,227 | 17,485 | 53,613 | 50,819 | |||||||||||||||||||
| Total revenues | 306,591 | 316,914 | 970,096 | 903,769 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of revenue (1) | 171,753 | 158,712 | 517,372 | 476,811 | |||||||||||||||||||
| Research and development | 35,899 | 35,248 | 114,348 | 104,791 | |||||||||||||||||||
| Selling and marketing | 32,794 | 33,413 | 102,793 | 90,211 | |||||||||||||||||||
| General and administrative | 30,516 | 29,717 | 84,753 | 89,429 | |||||||||||||||||||
| Depreciation and amortization | 32,140 | 31,845 | 95,218 | 95,434 | |||||||||||||||||||
| Total operating expenses | 303,102 | 288,935 | 914,484 | 856,676 | |||||||||||||||||||
| Operating income | 3,489 | 27,979 | 55,612 | 47,093 | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Interest expense | (14,336) | (11,208) | (37,014) | (33,943) | |||||||||||||||||||
| Interest income | 2,995 | 2,834 | 9,205 | 8,553 | |||||||||||||||||||
| Other, net | 41,545 | (1,088) | 45,801 | (1,036) | |||||||||||||||||||
| Total other income (expense) | 30,204 | (9,462) | 17,992 | (26,426) | |||||||||||||||||||
| Income before income taxes | 33,693 | 18,517 | 73,604 | 20,667 | |||||||||||||||||||
| Income tax expense (benefit) | 10,576 | 4,753 | 21,655 | 2,347 | |||||||||||||||||||
| Net income | $ | 23,117 | $ | 13,764 | $ | 51,949 | $ | 18,320 | |||||||||||||||
| Income per common share | |||||||||||||||||||||||
| Basic | $ | 0.20 | $ | 0.12 | $ | 0.45 | $ | 0.16 | |||||||||||||||
| Diluted | $ | 0.20 | $ | 0.12 | $ | 0.45 | $ | 0.15 | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | 113,812 | 117,512 | 114,584 | 117,574 | |||||||||||||||||||
| Diluted | 114,348 | 118,540 | 115,211 | 118,817 | |||||||||||||||||||
(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, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net income | $ | 23,117 | $ | 13,764 | $ | 51,949 | $ | 18,320 | |||||||||||||||
| Adjustments to reconcile net income to net cash flows from operating activities: | |||||||||||||||||||||||
| Depreciation | 6,044 | 5,130 | 17,052 | 15,838 | |||||||||||||||||||
| Amortization | 26,096 | 28,250 | 78,817 | 84,528 | |||||||||||||||||||
| Amortization of operating lease right-of-use assets | 2,807 | 2,752 | 8,296 | 7,752 | |||||||||||||||||||
| Amortization of deferred debt issuance costs | 1,136 | 1,168 | 3,435 | 3,525 | |||||||||||||||||||
| Deferred income taxes | (2,674) | (2,184) | (9,059) | (11,742) | |||||||||||||||||||
| Stock-based compensation expense | 7,126 | 6,367 | 21,884 | 20,790 | |||||||||||||||||||
| Gain on divestiture | (38,452) | — | (38,452) | — | |||||||||||||||||||
| Other | 1,359 | (463) | 2,483 | (27) | |||||||||||||||||||
| Changes in operating assets and liabilities: | |||||||||||||||||||||||
| Receivables | 19,807 | (20,801) | 5,767 | 55,953 | |||||||||||||||||||
| Accounts payable | (1,728) | (2,540) | (3,047) | (5,080) | |||||||||||||||||||
| Accrued employee compensation | 6,329 | 7,261 | (3,872) | (1,140) | |||||||||||||||||||
| Deferred revenue | (11,899) | 10,042 | (6,367) | 10,339 | |||||||||||||||||||
| Other current and noncurrent assets and liabilities | (4,865) | (9,248) | (26,920) | (54,573) | |||||||||||||||||||
| Net cash flows from operating activities | 34,203 | 39,498 | 101,966 | 144,483 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Purchases of property and equipment | (4,466) | (4,893) | (8,123) | (12,968) | |||||||||||||||||||
| Purchases of software and distribution rights | (7,656) | (4,389) | (18,394) | (20,041) | |||||||||||||||||||
| Proceeds from divestiture | 100,139 | — | 100,139 | — | |||||||||||||||||||
| Net cash flows from investing activities | 88,017 | (9,282) | 73,622 | (33,009) | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Proceeds from issuance of common stock | 839 | 878 | 2,801 | 2,526 | |||||||||||||||||||
| Proceeds from exercises of stock options | 395 | 208 | 1,792 | 7,252 | |||||||||||||||||||
| Repurchase of stock-based compensation awards for tax withholdings | (18) | (37) | (5,820) | (14,833) | |||||||||||||||||||
| Repurchases of common stock | (28,227) | — | (90,934) | (39,411) | |||||||||||||||||||
| Proceeds from revolving credit facility | 25,000 | — | 85,000 | — | |||||||||||||||||||
| Repayment of revolving credit facility | (55,000) | (25,000) | (75,000) | (55,000) | |||||||||||||||||||
| Repayment of term portion of credit agreement | (49,606) | (9,737) | (70,825) | (29,212) | |||||||||||||||||||
| Payments on or proceeds from other debt, net | (737) | (1,915) | (10,106) | (10,187) | |||||||||||||||||||
| Net decrease in settlement assets and liabilities | 24,659 | 22,611 | 20,084 | (55,470) | |||||||||||||||||||
| Net cash flows from financing activities | (82,695) | (12,992) | (143,008) | (194,335) | |||||||||||||||||||
| Effect of exchange rate fluctuations on cash | 1,002 | 472 | (60) | 84 | |||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | 40,527 | 17,696 | 32,520 | (82,777) | |||||||||||||||||||
| Cash and cash equivalents, including settlement deposits, beginning of period | 176,135 | 164,909 | 184,142 | 265,382 | |||||||||||||||||||
| Cash and cash equivalents, including settlement deposits, end of period | $ | 216,662 | $ | 182,605 | $ | 216,662 | $ | 182,605 | |||||||||||||||
| Reconciliation of cash and cash equivalents to the Consolidated Balance Sheets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 134,799 | $ | 141,482 | $ | 134,799 | $ | 141,482 | |||||||||||||||
| Settlement deposits | 81,863 | 41,123 | 81,863 | 41,123 | |||||||||||||||||||
| Total cash and cash equivalents | $ | 216,662 | $ | 182,605 | $ | 216,662 | $ | 182,605 | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Adjusted EBITDA (millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Net income | $ | 23.1 | $ | 13.8 | $ | 51.9 | $ | 18.3 | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Income tax expense | 10.6 | 4.7 | 21.7 | 2.3 | |||||||||||||||||||
| Net interest expense | 11.3 | 8.4 | 27.8 | 25.4 | |||||||||||||||||||
| Net other income (expense) | (41.4) | 1.1 | (45.8) | 1.0 | |||||||||||||||||||
| Depreciation expense | 6.0 | 5.1 | 17.1 | 15.9 | |||||||||||||||||||
| Amortization expense | 26.1 | 28.2 | 78.8 | 84.5 | |||||||||||||||||||
| Non-cash stock-based compensation expense | 7.1 | 6.4 | 21.9 | 20.8 | |||||||||||||||||||
| Adjusted EBITDA before significant transaction-related expenses | $ | 42.8 | $ | 67.7 | $ | 173.4 | $ | 168.2 | |||||||||||||||
| Significant transaction-related expenses: | |||||||||||||||||||||||
| Employee related actions | — | 4.4 | — | 8.1 | |||||||||||||||||||
| European datacenter migration | 1.7 | — | 3.4 | — | |||||||||||||||||||
| Divestiture transaction related | 1.2 | — | 2.6 | — | |||||||||||||||||||
| Other | — | 1.6 | — | 2.5 | |||||||||||||||||||
| Adjusted EBITDA | $ | 45.7 | $ | 73.7 | $ | 179.4 | $ | 178.8 | |||||||||||||||
| Revenue, net of interchange: | |||||||||||||||||||||||
| Revenue | $ | 306.6 | $ | 316.9 | $ | 970.1 | $ | 903.8 | |||||||||||||||
| Interchange | 98.4 | 87.8 | 295.4 | 262.6 | |||||||||||||||||||
| Revenue, net of interchange | $ | 208.2 | $ | 229.1 | $ | 674.7 | $ | 641.2 | |||||||||||||||
| Net Adjusted EBITDA Margin | 22 | % | 32 | % | 27 | % | 28 | % | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Segment Information (millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Banks | $ | 117.5 | $ | 131.7 | $ | 391.6 | $ | 341.7 | |||||||||||||||
| Merchants | 35.6 | 39.0 | 113.1 | 115.1 | |||||||||||||||||||
| Billers | 153.5 | 146.2 | 465.4 | 447.0 | |||||||||||||||||||
| Total | $ | 306.6 | $ | 316.9 | $ | 970.1 | $ | 903.8 | |||||||||||||||
| Recurring Revenue | |||||||||||||||||||||||
| Banks | $ | 57.3 | $ | 63.6 | $ | 179.3 | $ | 189.6 | |||||||||||||||
| Merchants | 33.8 | 35.2 | 103.5 | 106.0 | |||||||||||||||||||
| Billers | 153.6 | 146.2 | 465.4 | 446.9 | |||||||||||||||||||
| Total | $ | 244.7 | $ | 245.0 | $ | 748.2 | $ | 742.6 | |||||||||||||||
| Segment Adjusted EBITDA | |||||||||||||||||||||||
| Banks | $ | 49.8 | $ | 67.6 | $ | 184.7 | $ | 159.3 | |||||||||||||||
| Merchants | 9.8 | 14.2 | 32.2 | 42.0 | |||||||||||||||||||
| Billers | 26.3 | 32.0 | 81.0 | 100.6 | |||||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||||||||
| 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 | $ | 0.20 | $ | 23.1 | $ | 0.12 | $ | 13.8 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Gain on divestiture | (0.26) | (29.2) | — | — | |||||||||||||||||||
| Significant transaction-related expenses | 0.02 | 2.2 | 0.04 | 4.5 | |||||||||||||||||||
| Amortization of acquisition-related intangibles | 0.06 | 6.7 | 0.06 | 7.0 | |||||||||||||||||||
| Amortization of acquisition-related software | 0.04 | 4.5 | 0.05 | 6.0 | |||||||||||||||||||
| Non-cash stock-based compensation | 0.05 | 5.4 | 0.04 | 4.8 | |||||||||||||||||||
| Total adjustments | $ | (0.09) | $ | (10.4) | $ | 0.19 | $ | 22.3 | |||||||||||||||
| Diluted EPS adjusted for non-cash and significant transaction-related items | $ | 0.11 | $ | 12.7 | $ | 0.31 | $ | 36.1 | |||||||||||||||
| Nine Months Ended September 30, | |||||||||||||||||||||||
| 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 | $ | 0.45 | $ | 51.9 | $ | 0.15 | $ | 18.3 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Gain on divestiture | (0.25) | (29.2) | — | — | |||||||||||||||||||
| Significant transaction-related expenses | 0.04 | 4.7 | 0.07 | 8.0 | |||||||||||||||||||
| Amortization of acquisition-related intangibles | 0.18 | 20.6 | 0.18 | 21.1 | |||||||||||||||||||
| Amortization of acquisition-related software | 0.12 | 14.1 | 0.16 | 19.1 | |||||||||||||||||||
| Non-cash stock-based compensation | 0.14 | 16.6 | 0.13 | 15.8 | |||||||||||||||||||
| Total adjustments | $ | 0.23 | $ | 26.8 | $ | 0.54 | $ | 64.0 | |||||||||||||||
| Diluted EPS adjusted for non-cash and significant transaction-related items | $ | 0.68 | $ | 78.7 | $ | 0.69 | $ | 82.3 | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| Recurring Revenue (millions) | 2022 | 2021 | 2022 | 2021 | |||||||||||||||||||
| SaaS and PaaS fees | $ | 195.5 | $ | 191.5 | $ | 597.1 | $ | 583.5 | |||||||||||||||
| Maintenance fees | 49.2 | 53.5 | 151.1 | 159.1 | |||||||||||||||||||
| Recurring Revenue | $ | 244.7 | $ | 245.0 | $ | 748.2 | $ | 742.6 | |||||||||||||||
| Annual Recurring Revenue (ARR) Bookings (millions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| ARR bookings | $ | 30.3 | $ | 22.4 | $ | 69.5 | $ | 49.7 | |||||||||||||||
Q3 2022 Earnings Presentation November 2, 2022
Private Securities Litigation Reform Act of 1995 Safe Harbor for Forward-Looking Statements 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 statements in this presentation, except as required by law. 2
ACI Delivers Mission-Critical Payment Solutions We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce. Our proven, secure and scalable software solutions enable leading corporations, fintechs, financial disruptors and merchants to: Process and manage digital payments Enable omni-commerce payments Present and process bill payments Manage fraud and risk ACI Worldwide is a global leader in mission-critical, real-time payments software. 3
Three-Pillar Strategy 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 • Maintaining 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, international markets and the next- generation, real-time payments platform 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 Fit for Growth Focused on Growth Step-Change Value Creation 4
Q3 2022 Highlights Consolidated Results Segment Results Balance Sheet * Corporate Online Banking divestiture • Q3 revenue of $307 million, up 1% adjusted for FX and divestiture*, versus Q3 2021 • Q3 net adjusted EBITDA margin of 21% adjusted for FX and divestiture* Banking: • Q3 revenue down 4% adjusted for FX and divestiture*, versus Q3 2021 Merchant: • Q3 revenue down 3% adjusted for FX • ARR bookings up 46%, versus Q3 2021 Biller: • Q3 revenue up 5% • ARR bookings up 132%, versus Q3 2021 • $135M cash balance** • $1.0B debt** Net debt ratio of 2.3x • Repurchased 1.2M shares in Q3 2022 Revenue in Line With Guidance; Strong ARR Bookings 5 • Repurchased 3.2M shares YTD through Q3 2022** - $125M remaining on authorization ** Statistics as of 9/30/2022
• Revenue growth expected to be in the mid-single digits on a constant currency basis • Adjusted EBITDA is expected to be in the range of $365M - $380M • EBITDA has been adjusted for FX fluctuations, as well as the impact of inflationary pressure limited to the interchange component of the Biller segment Revenue EBITDA 2022 Guidance 6 • Adjusting for FX fluctuation, our full-year revenue is now expected to be in the range of $1.39B - $1.405B Reaffirming Mid-single Digit Revenue Growth for Year on Constant Currency Basis
ACI Next-Gen Real-Time Payments Cloud Advances ACI’s Technology Platform and Benefits Payments Modernization Agendas Simplified ecosystem of payment services Simple APIs Solution add-ons Partner, fintech and fraud ecosystems Accelerated time to market Configurations Low-code options Self-guided testing Pre-built adaptors Microservice architecture Reduction of the total cost of ownership Development effort Operational efficiencies Application management Hardware ownership Regulatory and compliance Launch: Expected 2023 7
Q3 2022: Recognition Leading Industry Research Firms and Awards Recognize ACI’s Solutions Leadership Most Innovative Fraud Prevention Solution Retail Innovation of the Year ACI® Smart Engage™ 8 Merchant Payments Ecosystem Awards Fintech & Payments
Three Months Ended September 30, Nine Months Ended September 30, Recurring Revenue (millions) 2022 2021 2022 2021 SaaS and PaaS fees $ 195.5 $ 191.5 $ 597.1 $ 583.5 Maintenance fees 49.2 53.5 151.1 159.1 Recurring Revenue $ 244.7 $ 245.0 $ 748.2 $ 742.6 Three Months Ended September 30, Nine Months Ended September 30, Annual Recurring Revenue (ARR) Bookings (millions) 2022 2021 2022 2021 ARR Bookings $ 30.3 $ 22.4 $ 69.5 $ 49.7 Supplemental Financial Data
Supplemental Financial Data Three Months Ended September 30, Nine Months Ended September 30, Adjusted EBITDA (millions) 2022 2021 2022 2021 Net income $ 23.1 $ 13.8 $ 51.9 $ 18.3 Plus: Income tax expense 10.6 4.7 21.7 2.3 Net interest expense 11.3 8.4 27.8 25.4 Net other income (expense) (41.4) 1.1 (45.8) 1.0 Depreciation expense 6.0 5.1 17.1 15.9 Amortization expense 26.1 28.2 78.8 84.5 Non-cash stock-based compensation expense 7.1 6.4 21.9 20.8 Adjusted EBITDA before significant transaction-related expenses $ 42.8 $ 67.7 $ 173.4 $ 168.2 Significant transaction-related expenses: Employee related actions — 4.4 — 8.1 European datacenter migration 1.7 — 3.4 — Divestiture transaction related 1.2 — 2.6 — Other — 1.6 — 2.5 Adjusted EBITDA $ 45.7 $ 73.7 $ 179.4 $ 178.8
Three Months Ended September 30, Nine Months Ended September 30, Segment Information (millions) 2022 2021 2022 2021 Revenue Banks $ 117.5 $ 131.7 $ 391.6 $ 341.7 Merchants 35.6 39.0 113.1 115.1 Billers 153.5 146.2 465.4 447.0 Total Revenue $ 306.6 $ 316.9 $ 970.1 $ 903.8 Recurring Revenue Banks $ 57.3 $ 63.6 $ 179.3 $ 189.6 Merchants 33.8 35.2 103.5 106.0 Billers 153.6 146.2 465.4 446.9 Total $ 244.7 $ 245.0 $ 748.2 $ 742.6 Segment Adjusted EBITDA Banks $ 49.8 $ 67.6 $ 184.7 $ 159.3 Merchants $ 9.8 $ 14.2 32.2 42.0 Billers $ 26.3 $ 32.0 81.0 100.6 Supplemental Financial Data
EPS Impact of Non-cash and Significant Transaction-related Items (millions) Three Months Ended September 30, 2022 2021 EPS Impact $ in Millions (Net of Tax) EPS Impact $ in Millions (Net of Tax) GAAP net income $ 0.20 $ 23.1 $ 0.12 $ 13.8 Adjusted for: Gain on divestiture (0.26) (29.2) — — Significant transaction-related expenses 0.02 2.2 0.04 4.5 Amortization of acquisition-related intangibles 0.06 6.7 0.06 7.0 Amortization of acquisition-related software 0.04 4.5 0.05 6.0 Non-cash stock-based compensation 0.05 5.4 0.04 4.8 Total adjustments (0.09) (10.4) 0.19 22.3 Diluted EPS adjusted for non-cash and significant transaction-related items $ 0.11 $ 12.7 $ 0.31 $ 36.1 Supplemental Financial Data Nine Months Ended September 30, 2022 2021 EPS Impact $ in Millions (Net of Tax) EPS Impact $ in Millions (Net of Tax) GAAP net income $ 0.45 $ 51.9 $ 0.15 $ 18.3 Adjusted for: Gain on divestiture (0.25) (29.2) — — Significant transaction-related expenses 0.04 4.7 0.07 8.0 Amortization of acquisition-related intangibles 0.18 20.6 0.18 21.1
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. • ARR: Annual recurring revenue expected to be generated from new accounts, new applications, and add-on sales bookings contracts signed in the quarter. Non-GAAP Financial Measures
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 our Three Pillar strategy, the expected launch and impact of our next-gen real-time payments cloud and our full year 2022 expectations for 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, the success of our Universal Payments strategy, demand for our products, consolidations and failures in the financial services industry, customer reluctance to switch to a new vendor, 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, the complexity of our products and services and the risk that they may contain hidden defects or be subjected to security breaches or viruses, compliance of our products with applicable legislation, governmental regulations and industry standards, our compliance with privacy regulations, our ability to protect customer information from security breaches or attacks, our ability to adequately defend our intellectual property, exposure to credit or operating risks arising from certain payment funding methods, business interruptions or failure of our information technology and communication systems, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, exposure to unknown tax liabilities, adverse changes in the global economy, worldwide events outside of our control, failure to attract and retain key personnel, litigation, future acquisitions, strategic partnerships and investments, integration of and achieving benefits from the Speedpay acquisition, impairment of our goodwill or intangible assets, restrictions and other financial covenants in our debt agreements, our existing levels of debt, replacement of LIBOR benchmark interest rate, the accuracy of management’s backlog estimates, exposure to unknown tax liabilities, the cyclical nature of our revenue and earnings d th f f t d t th t ti f ti ti it d i th fi l k f h t l tilit Forward Looking Statements