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): March 1, 2023
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 March 1, 2023, ACI Worldwide, Inc. (“the Company”) issued a press release announcing its financial results for the three months and year ended December 31, 2022. A copy of this press release is attached hereto as Exhibit 99.1. Following the publication of the earnings release, the Company hosted an earnings call in which its financial results were discussed. The investor presentation materials used for the call are attached as Exhibit 99.2 hereto.
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 8.01. Other Events.
The press release issued by the Company on March 1, 2023, also announced that its Board of Directors has authorized an increase to its share repurchase program, and with this increase, the Company now has $200 million remaining on its share buyback authorization. A copy of this press release is attached hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Press Release dated March 1, 2023 | |||||
| Investor presentation materials dated March 1, 2023 | |||||
| 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: March 1, 2023 | 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 and Full Year Ended December 31, 2022
2022 HIGHLIGHTS
•Revenue of $1.422 billion, up 7% from 2021 adjusted for FX and divestiture1
•ARR2 bookings up 35% from 2021
•Repurchased 8.6 million shares for $207 million
•Increased repurchase authorization up to $200 million
Miami, FL — March 1, 2023 — ACI Worldwide (NASDAQ: ACIW), the global leader in mission-critical, real-time payments software, announced financial results today for the quarter and full-year ended December 31, 2022.
"2022 was an important year for ACI, with significant new business wins, solid organic revenue growth and accelerating ARR bookings," said Thomas Warsop, Interim President and CEO of ACI Worldwide. "Looking forward, we are excited about the opportunities across our businesses, particularly in Real Time and the Cloud, and confident in our ability to achieve our long term revenue growth target of 7-9% by 2024. We are making progress in our CEO search and expect to conclude the search in the coming months."
FINANCIAL SUMMARY
In Q4 2022, revenue was $452 million, down from $467 million in Q4 2021. Net income was $90 million, versus $109 million in Q4 2021. Adjusted EBITDA in Q4 2022 was $194 million, versus $205 million in Q4 2021.
Full-year 2022 total revenue was $1.422 billion, up 4% from 2021, or 7% adjusted for FX and the divestiture. Net income of $142 million increased 11% from $128 million in 2021. Total adjusted EBITDA in 2022 was $373 million compared to $384 million in 2021. Consolidated ARR bookings for 2022 grew 35% over 2021.
•Bank segment revenue increased 9%, and Bank segment adjusted EBITDA increased 4%, versus 2021, adjusted for FX and the divestiture.
•Merchant segment revenue increased 5% and Merchant segment adjusted EBITDA decreased 4%, versus 2021 on a constant currency basis, driven by investment that is expected to increase growth in 2023.
•Biller segment revenue increased 6%, while Biller segment adjusted EBITDA decreased 17%, versus 2021, driven by increased interchange costs due to inflationary increases in average bill size.
ACI ended 2022 with $125 million in cash on hand and a debt balance of $1 billion, which represents a net debt leverage ratio of 2.6x. The company repurchased 8.6 million shares for $207 million during the year and the Board has approved an increase in the share repurchase authorization up to $200 million.
"The ACI Board continues to actively pursue opportunities to enhance shareholder value, as evidenced by the increase in the share repurchase authorization," Warsop concluded.
2023 GUIDANCE
For the full year of 2023, we expect revenue growth to be in the mid-single-digits on a constant currency and divestiture-adjusted basis, or in the range of $1.436 billion to $1.466 billion. We expect adjusted EBITDA to be in the range of $380 million to $395 million with net adjusted EBITDA margin expansion. We expect revenue to be between $280 million and $290 million and adjusted EBITDA of $20 million to $30 million in Q1 2023. This excludes one-time charges related to the move of our European data centers to the public cloud and one-time costs to implement certain efficiency strategies.
1 Corporate Online Banking divestiture
2 “ARR”' is annual recurring revenue expected to be generated from new bookings signed in the quarter, including new accounts, new applications and add-on sales
CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS
Today, management will host a conference call at 8:30 am ET to discuss these results. Interested persons may access a real-time audio broadcast of the teleconference at http://investor.aciworldwide.com/ or use the following number for dial-in participation: toll-free 1 (888) 660-6377; and conference code 3153574. A call replay will be available for two weeks on (855) 859-2056 for US/Canada callers and +1 (404) 537-3406 for international participants.
About ACI Worldwide
ACI Worldwide is a global leader in mission-critical, real-time payments software. Our proven, secure and scalable software solutions enable leading corporations, fintechs, and financial disruptors to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce.
© Copyright ACI Worldwide, Inc. 2023.
ACI, ACI Worldwide, ACI Payments, Inc., ACI Pay, Speedpay and all ACI product/solution names are trademarks or registered trademarks of ACI Worldwide, Inc., or one of its subsidiaries, in the United States, other countries or both. Other parties' trademarks referenced are the property of their respective owners.
For more information contact:
Investor Relations:
John Kraft
SVP, Head of Strategy and Finance
239-403-4627 / 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) excitement about the opportunities across our businesses, particularly in Real Time and the Cloud, (ii) confidence in our ability to achieve our long term revenue growth of 7-9% by 2024, (iii) progress in our CEO search and expectations to conclude the search in the coming months, (iv) the ACI Board continuing to actively pursue opportunities to enhance shareholder value, and (v) statements regarding Q1 2023 and full year 2023 revenue and adjusted EBITDA financial guidance.
All of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission. Such factors include, but are not limited to, increased competition, business interruptions or failure of our information technology and communication systems, security breaches or viruses, our ability to attract and retain senior management personnel and skilled technical employees, future acquisitions, strategic partnerships and investments, divestitures and other restructuring activities, implementation and success of our strategy, impact if we convert some or all on-premise licenses from fixed-term to subscription model, anti-takeover provisions, exposure to credit or operating risks arising from certain payment funding methods, customer reluctance to switch to a new vendor, our ability to adequately defend our intellectual property, litigation, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, events in eastern Europe, adverse changes in the global economy, compliance of our products with applicable legislation, governmental regulations and industry standards, the complexity of our products and services and the risk that they may contain hidden defects, complex regulations applicable to our payments business, our compliance with privacy and cybersecurity regulations, our involvement in investigations, lawsuits and other expense and time-consuming legal proceedings, exposure to unknown tax liabilities, changes in tax laws and regulations, consolidations and failures in the financial services industry, volatility in our stock price, demand for our products, failure to obtain renewals of customer contracts or to obtain such renewals on favorable terms, delay or cancellation of customer projects or inaccurate project completion estimates, impairment of our goodwill or intangible assets, the accuracy of management’s backlog estimates, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue-generating activity during the final weeks of each quarter, restrictions and other financial covenants in our debt agreements, our existing levels of debt, events outside of our control including natural disasters, wars, and outbreaks of disease, and revenues or revenue mix. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited and in thousands, except share and per share amounts)
| December 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 124,981 | $ | 122,059 | |||||||
| Receivables, net of allowances | 403,781 | 320,405 | |||||||||
| Settlement assets | 540,667 | 452,396 | |||||||||
| Prepaid expenses | 28,010 | 24,698 | |||||||||
| Other current assets | 17,366 | 17,876 | |||||||||
| Total current assets | 1,114,805 | 937,434 | |||||||||
| Noncurrent assets | |||||||||||
| Accrued receivables, net | 297,818 | 276,164 | |||||||||
| Property and equipment, net | 52,499 | 63,050 | |||||||||
| Operating lease right-of-use assets | 40,031 | 47,825 | |||||||||
| Software, net | 129,109 | 157,782 | |||||||||
| Goodwill | 1,226,026 | 1,280,226 | |||||||||
| Intangible assets, net | 228,698 | 283,004 | |||||||||
| Deferred income taxes, net | 53,738 | 50,778 | |||||||||
| Other noncurrent assets | 67,171 | 62,478 | |||||||||
| TOTAL ASSETS | $ | 3,209,895 | $ | 3,158,741 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 47,997 | $ | 41,312 | |||||||
| Settlement liabilities | 539,087 | 451,575 | |||||||||
| Employee compensation | 45,289 | 51,379 | |||||||||
| Current portion of long-term debt | 65,521 | 45,870 | |||||||||
| Deferred revenue | 58,303 | 84,425 | |||||||||
| Other current liabilities | 102,645 | 79,594 | |||||||||
| Total current liabilities | 858,842 | 754,155 | |||||||||
| Noncurrent liabilities | |||||||||||
| Deferred revenue | 23,233 | 25,925 | |||||||||
| Long-term debt | 1,024,351 | 1,019,872 | |||||||||
| Deferred income taxes, net | 40,371 | 36,122 | |||||||||
| Operating lease liabilities | 33,910 | 43,346 | |||||||||
| Other noncurrent liabilities | 36,001 | 34,544 | |||||||||
| Total liabilities | 2,016,708 | 1,913,964 | |||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock | — | — | |||||||||
| Common stock | 702 | 702 | |||||||||
| Additional paid-in capital | 702,458 | 688,313 | |||||||||
| Retained earnings | 1,273,458 | 1,131,281 | |||||||||
| Treasury stock | (665,771) | (475,972) | |||||||||
| Accumulated other comprehensive loss | (117,660) | (99,547) | |||||||||
| Total stockholders’ equity | 1,193,187 | 1,244,777 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 3,209,895 | $ | 3,158,741 | |||||||
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Software as a service and platform as a service | $ | 205,800 | $ | 190,812 | $ | 802,880 | $ | 774,342 | |||||||||||||||
| License | 179,874 | 209,484 | 348,134 | 319,867 | |||||||||||||||||||
| Maintenance | 48,902 | 51,462 | 200,045 | 210,499 | |||||||||||||||||||
| Services | 17,229 | 15,071 | 70,842 | 65,890 | |||||||||||||||||||
| Total revenues | 451,805 | 466,829 | 1,421,901 | 1,370,598 | |||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Cost of revenue (1) | 178,699 | 162,060 | 696,071 | 638,871 | |||||||||||||||||||
| Research and development | 31,963 | 39,519 | 146,311 | 144,310 | |||||||||||||||||||
| Selling and marketing | 32,019 | 36,328 | 134,812 | 126,539 | |||||||||||||||||||
| General and administrative | 29,441 | 34,372 | 114,194 | 123,801 | |||||||||||||||||||
| Depreciation and amortization | 31,460 | 31,746 | 126,678 | 127,180 | |||||||||||||||||||
| Total operating expenses | 303,582 | 304,025 | 1,218,066 | 1,160,701 | |||||||||||||||||||
| Operating income | 148,223 | 162,804 | 203,835 | 209,897 | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Interest expense | (16,179) | (11,117) | (53,193) | (45,060) | |||||||||||||||||||
| Interest income | 3,342 | 2,969 | 12,547 | 11,522 | |||||||||||||||||||
| Other, net | (2,355) | (258) | 43,446 | (1,294) | |||||||||||||||||||
| Total other income (expense) | (15,192) | (8,406) | 2,800 | (34,832) | |||||||||||||||||||
| Income before income taxes | 133,031 | 154,398 | 206,635 | 175,065 | |||||||||||||||||||
| Income tax expense | 42,803 | 44,927 | 64,458 | 47,274 | |||||||||||||||||||
| Net income | $ | 90,228 | $ | 109,471 | $ | 142,177 | $ | 127,791 | |||||||||||||||
| Income per common share | |||||||||||||||||||||||
| Basic | $ | 0.81 | $ | 0.94 | $ | 1.25 | $ | 1.09 | |||||||||||||||
| Diluted | $ | 0.81 | $ | 0.93 | $ | 1.24 | $ | 1.08 | |||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||
| Basic | 111,077 | 116,912 | 113,700 | 117,407 | |||||||||||||||||||
| Diluted | 111,354 | 118,141 | 114,238 | 118,647 | |||||||||||||||||||
(1) The cost of revenue excludes charges for depreciation but includes amortization of purchased and developed software for resale.
ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited and in thousands)
| Three Months Ended December 31, | Years Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Cash flows from operating activities: | |||||||||||||||||||||||
| Net income | $ | 90,228 | $ | 109,471 | $ | 142,177 | $ | 127,791 | |||||||||||||||
| Adjustments to reconcile net income to net cash flows from operating activities: | |||||||||||||||||||||||
| Depreciation | 6,129 | 5,062 | 23,181 | 20,900 | |||||||||||||||||||
| Amortization | 25,330 | 27,965 | 104,147 | 112,493 | |||||||||||||||||||
| Amortization of operating lease right-of-use assets | 2,740 | 2,763 | 11,036 | 10,515 | |||||||||||||||||||
| Amortization of deferred debt issuance costs | 1,126 | 1,160 | 4,561 | 4,685 | |||||||||||||||||||
| Deferred income taxes | 10,662 | 15,475 | 1,603 | 3,733 | |||||||||||||||||||
| Stock-based compensation expense | 7,869 | 6,452 | 29,753 | 27,242 | |||||||||||||||||||
| Gain on divestiture | — | — | (38,452) | — | |||||||||||||||||||
| Other | 545 | 882 | 3,028 | 855 | |||||||||||||||||||
| Changes in operating assets and liabilities, net of impact of acquisitions: | |||||||||||||||||||||||
| Receivables | (137,961) | (99,783) | (132,194) | (43,830) | |||||||||||||||||||
| Accounts payable | 10,777 | 6,488 | 7,730 | 1,408 | |||||||||||||||||||
| Accrued employee compensation | 711 | 4,814 | (3,161) | 3,674 | |||||||||||||||||||
| Deferred revenue | 3,390 | (27,671) | (2,977) | (17,332) | |||||||||||||||||||
| Other current and noncurrent assets and liabilities | 19,869 | 22,913 | (7,051) | (31,661) | |||||||||||||||||||
| Net cash flows from operating activities | 41,415 | 75,991 | 143,381 | 220,473 | |||||||||||||||||||
| Cash flows from investing activities: | |||||||||||||||||||||||
| Purchases of property and equipment | (4,980) | (7,614) | (13,103) | (20,582) | |||||||||||||||||||
| Purchases of software and distribution rights | (8,396) | (4,745) | (26,790) | (24,786) | |||||||||||||||||||
| Proceeds from divestiture | — | — | 100,139 | — | |||||||||||||||||||
| Net cash flows from investing activities | (13,376) | (12,359) | 60,246 | (45,368) | |||||||||||||||||||
| Cash flows from financing activities: | |||||||||||||||||||||||
| Proceeds from issuance of common stock | 780 | 914 | 3,581 | 3,440 | |||||||||||||||||||
| Proceeds from exercises of stock options | 2,792 | 1,610 | 4,584 | 8,862 | |||||||||||||||||||
| Repurchase of stock-based compensation awards for tax withholdings | (1,163) | — | (6,983) | (14,833) | |||||||||||||||||||
| Repurchases of common stock | (115,603) | (67,967) | (206,537) | (107,378) | |||||||||||||||||||
| Proceeds from revolving credit facility | 95,000 | 35,000 | 180,000 | 35,000 | |||||||||||||||||||
| Repayment of revolving credit facility | — | (35,000) | (75,000) | (90,000) | |||||||||||||||||||
| Repayment of term portion of credit agreement | (14,606) | (9,738) | (85,431) | (38,950) | |||||||||||||||||||
| Payments on or proceeds from other debt, net | (2,017) | (4,998) | (12,123) | (15,185) | |||||||||||||||||||
| Net increase (decrease) in settlement assets and liabilities | 6,765 | 17,635 | 26,849 | (37,834) | |||||||||||||||||||
| Net cash flows from financing activities | (28,052) | (62,544) | (171,060) | (256,878) | |||||||||||||||||||
| Effect of exchange rate fluctuations on cash | (1,977) | 449 | (2,037) | 533 | |||||||||||||||||||
| Net increase (decrease) in cash and cash equivalents | (1,990) | 1,537 | 30,530 | (81,240) | |||||||||||||||||||
| Cash and cash equivalents, including settlement deposits, beginning of period | 216,662 | 182,605 | 184,142 | 265,382 | |||||||||||||||||||
| Cash and cash equivalents, including settlement deposits, end of period | $ | 214,672 | $ | 184,142 | $ | 214,672 | $ | 184,142 | |||||||||||||||
| Reconciliation of cash and cash equivalents to the Consolidated Balance Sheets | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 124,981 | $ | 122,059 | $ | 124,981 | $ | 122,059 | |||||||||||||||
| Settlement deposits | 89,691 | 62,083 | 89,691 | 62,083 | |||||||||||||||||||
| Total cash and cash equivalents | $ | 214,672 | $ | 184,142 | $ | 214,672 | $ | 184,142 | |||||||||||||||
| Adjusted EBITDA (millions) | Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income | $ | 90.2 | $ | 109.5 | $ | 142.2 | $ | 127.8 | |||||||||||||||
| Plus: | |||||||||||||||||||||||
| Income tax expense | 42.8 | 44.9 | 64.5 | 47.3 | |||||||||||||||||||
| Net interest expense | 12.8 | 8.1 | 40.6 | 33.5 | |||||||||||||||||||
| Net other (income) expense | 2.4 | 0.3 | (43.4) | 1.3 | |||||||||||||||||||
| Depreciation expense | 6.1 | 5.1 | 23.2 | 20.9 | |||||||||||||||||||
| Amortization expense | 25.3 | 28.0 | 104.1 | 112.5 | |||||||||||||||||||
| Non-cash stock-based compensation expense | 7.9 | 6.4 | 29.8 | 27.2 | |||||||||||||||||||
| Adjusted EBITDA before significant transaction-related expenses | $ | 187.5 | $ | 202.3 | $ | 361.0 | $ | 370.5 | |||||||||||||||
| Significant transaction-related expenses: | |||||||||||||||||||||||
| CEO transition | 3.6 | — | 3.6 | — | |||||||||||||||||||
| Employee related actions | — | 2.2 | — | 10.3 | |||||||||||||||||||
| European datacenter migration | 2.4 | — | 5.8 | — | |||||||||||||||||||
| Divestiture transaction related | 0.4 | — | 3.0 | — | |||||||||||||||||||
| Other | — | 0.6 | — | 3.1 | |||||||||||||||||||
| Adjusted EBITDA | $ | 193.9 | $ | 205.1 | $ | 373.4 | $ | 383.9 | |||||||||||||||
| Revenue, net of interchange: | |||||||||||||||||||||||
| Revenue | $ | 451.8 | $ | 466.8 | $ | 1,421.9 | $ | 1,370.6 | |||||||||||||||
| Interchange | 111.2 | 90.0 | 406.6 | 352.7 | |||||||||||||||||||
| Revenue, net of interchange | $ | 340.6 | $ | 376.8 | $ | 1,015.3 | $ | 1,017.9 | |||||||||||||||
| Net adjusted EBITDA Margin | 57 | % | 54 | % | 37 | % | 38 | % | |||||||||||||||
| Segment Information (millions) | Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Banks | $ | 247.0 | $ | 283.4 | $ | 638.6 | $ | 625.1 | |||||||||||||||
| Merchants | 40.8 | 37.9 | 153.9 | 153.0 | |||||||||||||||||||
| Billers | 164.0 | 145.5 | 629.4 | 592.5 | |||||||||||||||||||
| Total | $ | 451.8 | $ | 466.8 | $ | 1,421.9 | $ | 1,370.6 | |||||||||||||||
| Recurring revenue | |||||||||||||||||||||||
| Banks | $ | 53.6 | $ | 61.0 | $ | 232.9 | $ | 250.6 | |||||||||||||||
| Merchants | 37.1 | 35.8 | 140.6 | 141.8 | |||||||||||||||||||
| Billers | 164.0 | 145.5 | 629.4 | 592.4 | |||||||||||||||||||
| Total | $ | 254.7 | $ | 242.3 | $ | 1,002.9 | $ | 984.8 | |||||||||||||||
| Segment adjusted EBITDA | |||||||||||||||||||||||
| Banks | $ | 186.3 | $ | 213.6 | $ | 371.0 | $ | 372.9 | |||||||||||||||
| Merchants | 16.8 | 12.3 | 49.0 | 54.3 | |||||||||||||||||||
| Billers | 26.4 | 28.4 | 107.4 | 129.0 | |||||||||||||||||||
| EPS Impact of Non-cash and Significant Transaction-related Items (millions) | Three Months Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| EPS Impact | $ in Millions (Net of Tax) | EPS Impact | $ in Millions (Net of Tax) | ||||||||||||||||||||
| GAAP net income | $ | 0.81 | $ | 90.2 | $ | 0.93 | $ | 109.5 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Significant transaction-related expenses | 0.04 | 4.9 | 0.02 | 2.1 | |||||||||||||||||||
| Amortization of acquisition-related intangibles | 0.06 | 6.4 | 0.06 | 7.0 | |||||||||||||||||||
| Amortization of acquisition-related software | 0.04 | 4.5 | 0.05 | 5.5 | |||||||||||||||||||
| Non-cash stock-based compensation | 0.05 | 6.0 | 0.04 | 4.9 | |||||||||||||||||||
| Total adjustments | $ | 0.19 | $ | 21.8 | $ | 0.17 | $ | 19.5 | |||||||||||||||
| Diluted EPS adjusted for non-cash and significant transaction-related items | $ | 1.00 | $ | 112.0 | $ | 1.10 | $ | 129.0 | |||||||||||||||
| EPS Impact of Non-cash and Significant Transaction-related Items (millions) | Years Ended December 31, | ||||||||||||||||||||||
| 2022 | 2021 | ||||||||||||||||||||||
| EPS Impact | $ in Millions (Net of Tax) | EPS Impact | $ in Millions (Net of Tax) | ||||||||||||||||||||
| GAAP net income | $ | 1.24 | $ | 142.2 | $ | 1.08 | $ | 127.8 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Gain on divestiture | (0.26) | (29.2) | — | — | |||||||||||||||||||
| Significant transaction-related expenses | 0.08 | 9.6 | 0.09 | 10.2 | |||||||||||||||||||
| Amortization of acquisition-related intangibles | 0.24 | 27.0 | 0.24 | 28.1 | |||||||||||||||||||
| Amortization of acquisition-related software | 0.16 | 18.6 | 0.21 | 24.6 | |||||||||||||||||||
| Non-cash stock-based compensation | 0.20 | 22.6 | 0.17 | 20.7 | |||||||||||||||||||
| Total adjustments | $ | 0.42 | $ | 48.6 | $ | 0.71 | $ | 83.6 | |||||||||||||||
| Diluted EPS adjusted for non-cash and significant transaction-related items | $ | 1.66 | $ | 190.8 | $ | 1.79 | $ | 211.4 | |||||||||||||||
| Recurring Revenue (millions) | Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| SaaS and PaaS fees | $ | 205.8 | $ | 190.8 | $ | 802.9 | $ | 774.3 | |||||||||||||||
| Maintenance fees | 48.9 | 51.5 | 200.0 | 210.5 | |||||||||||||||||||
| Recurring revenue | $ | 254.7 | $ | 242.3 | $ | 1,002.9 | $ | 984.8 | |||||||||||||||
| Annual Recurring Revenue (ARR) Bookings (millions) | Three Months Ended December 31, | Years Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| ARR bookings | $ | 40.2 | $ | 31.8 | $ | 109.7 | $ | 81.5 | |||||||||||||||
Q4 and Full Year 2022 Earnings Presentation March 1, 2023 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. Our proven, secure and scalable software solutions enable leading corporations, fintechs and financial disruptors to: Process and manage digital payments Enable omni-commerce payments Present and process bill payments Manage fraud and risk 3 ACI Worldwide is the global leader in mission-critical, real-time payments software.
FY 2022 Highlights 4 Consolidated Results Segment Results Balance Sheet • Statistics as of 12/31/2022 • Adjusted for FX and Corporate Online Banking divestiture Total revenue of $1.4B, up 7% from 2021* Banking revenue up 9%* Merchant revenue up 5%* Biller revenue up 6% $125M cash balance* $1B debt Net debt ratio of 2.6x*Adjusted EBITDA of $373M versus $384 million in 2021 Repurchased 8.6 million shares in 2022 for $207 million Authorization increased up to $200 million ARR bookings growth of 35% over 2021
2023 Guidance 5 • Q1 Revenue expected to be in a range of $280 - $290 million • Q1 Adjusted EBITDA expected to be in a range of $20 - $30 million 2023 Guidance Range 2022 Actual Deduct COB* FX Impact 2022 Proforma Low High Implied Growth Rate Revenue 1,422 (32) (5) 1,385 1,436 1,466 4-6% Adjusted EBITDA 373 (14) - 359 380 395 6-10% $'s in millions Foreign currency rates as of 12/31/22 * Proforma for the sale of the Corporate Online Banking business on September 1, 2022
7 Three Months Ended December 31, Years Ended December 31, Recurring Revenue (millions) 2022 2021 2022 2021 SaaS and PaaS fees $ 205.8 $ 190.8 $ 802.9 $ 774.3 Maintenance fees 48.9 51.5 200.0 210.5 Recurring Revenue $ 254.7 $ 242.3 $ 1,002.9 $ 984.8 Three Months Ended December 31, Years Ended December 31, Annual Recurring Revenue (ARR) Bookings (millions) 2022 2021 2022 2021 ARR Bookings $ 40.2 $ 31.8 $ 109.7 $ 81.5 Supplemental Financial Data
8 Supplemental Financial Data Adjusted EBITDA (millions) Three Months Ended December 31, Years Ended December 31, 2022 2021 2022 2021 Net income $ 90.2 $ 109.5 $ 142.2 $ 127.8 Plus: Income tax expense 42.8 44.9 64.5 47.3 Net interest expense 12.8 8.1 40.6 33.5 Net other (income) expense 2.4 0.3 (43.4) 1.3 Depreciation expense 6.1 5.1 23.2 20.9 Amortization expense 25.3 28.0 104.1 112.5 Non-cash stock-based compensation expense 7.9 6.4 29.8 27.2 Adjusted EBITDA before significant transaction-related expenses 187.5 202.3 361.0 370.5 Significant transaction-related expenses: CEO transition 3.6 — 3.6 — Employee related actions — 2.2 — 10.3 European datacenter migration 2.4 — 5.8 — Divestiture transaction related 0.4 — 3.0 — Other — 0.6 — 3.1 Adjusted EBITDA $ 193.9 $ 205.1 $ 373.4 $ 383.9 Revenue, net of interchange Revenue $ 451.8 $ 466.8 $ 1,421.9 $ 1,370.6 Interchange 111.2 90.0 406.6 352.7 Revenue, net of interchange $ 340.6 $ 376.8 $ 1,015.3 $ 1,017.9 Net Adjusted EBITDA Margin 57 % 54 % 37 % 38 %
9 Segment Information (millions) Three Months Ended December 31, Years Ended December 31, 2022 2021 2022 2021 Revenue Banks $ 247.0 $ 283.4 $ 638.6 $ 625.1 Merchants 40.8 37.9 153.9 153.0 Billers 164.0 145.5 629.4 592.5 Total Revenue $ 451.8 $ 466.8 $ 1,421.9 $ 1,370.6 Recurring Revenue Banks $ 53.6 $ 61.0 $ 232.9 $ 250.6 Merchants 37.1 35.8 140.6 141.8 Billers 164.0 145.5 629.4 592.4 Total Recurring Revenue $ 254.7 $ 242.3 $ 1,002.9 $ 984.8 Segment Adjusted EBITDA Banks $ 186.3 $ 213.6 $ 371.0 $ 372.9 Merchants 16.8 12.3 49.0 54.3 Billers 26.4 28.4 107.4 129.0 Supplemental Financial Data
10 EPS impact of non-cash and significant transaction-related items Three Months Ended December 31, (millions) 2022 2021 EPS Impact $ in Millions (Net of Tax) EPS Impact $ in Millions (Net of Tax) GAAP net income $ 0.81 $ 90.2 $ 0.93 $ 109.5 Adjusted for: Significant transaction-related expenses 0.04 4.9 0.02 2.1 Amortization of acquisition-related intangibles 0.06 6.4 0.06 7.0 Amortization of acquisition-related software 0.04 4.5 0.05 5.5 Non-cash stock-based compensation 0.05 6.0 0.04 4.9 Total adjustments 0.19 21.8 0.17 19.5 Diluted EPS adjusted for non-cash and significant transaction- related items $ 1.00 $ 112.0 $ 1.10 $ 129.0 EPS impact of non-cash and significant transaction-related items Years Ended December 31, (millions) 2022 2021 EPS Impact $ in Millions (Net of Tax) EPS Impact $ in Millions (Net of Tax) GAAP net income $ 1.24 $ 142.2 $ 1.08 $ 127.8 Adjusted for: Gain on divestiture (0.26) (29.2) — — Significant transaction-related expenses 0.08 9.6 0.09 10.2 Amortization of acquisition-related intangibles 0.24 27.0 0.24 28.1 Amortization of acquisition-related software 0.16 18.6 0.21 24.6 Non-cash stock-based compensation 0.20 22.6 0.17 20.7 Total adjustments 0.42 48.6 0.71 83.6 Diluted EPS adjusted for non-cash and significant transaction- related items $ 1.66 $ 190.8 $ 1.79 $ 211.4 Supplemental Financial Data
11 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
12 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 Q1 2023 and full year 2023 revenue and adjusted EBITDA financial guidance. All of the foregoing forward-looking statements are expressly qualified by the risk factors discussed in our filings with the Securities and Exchange Commission. Such factors include, but are not limited to, increased competition, business interruptions or failure of our information technology and communication systems, security breaches or viruses, our ability to attract and retain senior management personnel and skilled technical employees, future acquisitions, strategic partnerships and investments, divestitures and other restructuring activities, implementation and success of our strategy, impact if we convert some or all on-premise licenses from fixed-term to subscription model, anti-takeover provisions, exposure to credit or operating risks arising from certain payment funding methods, customer reluctance to switch to a new vendor, our ability to adequately defend our intellectual property, litigation, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, events in eastern Europe, adverse changes in the global economy, compliance of our products with applicable legislation, governmental regulations and industry standards, the complexity of our products and services and the risk that they may contain hidden defects, complex regulations applicable to our payments business, our compliance with privacy and cybersecurity regulations, our involvement in investigations, lawsuits and other expense and time-consuming legal proceedings, exposure to unknown tax liabilities, changes in tax laws and regulations, consolidations and failures in the financial services industry, volatility in our stock price, demand for our products, failure to obtain renewals of customer contracts or to obtain such renewals on favorable terms, delay or cancellation of customer projects or inaccurate project completion estimates, impairment of our goodwill or intangible assets, the accuracy of management’s backlog estimates, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue-generating activity during the final weeks of each quarter, restrictions and other financial covenants in our debt agreements, our existing levels of debt, events outside of our control including natural disasters, wars, and outbreaks of disease, and revenues or revenue mix. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q. Forward Looking Statements