ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended June 30, 2022

Rhea-AI Summary

ACI Worldwide reported Q2 2022 financial results showing revenue of $340 million, a 13% increase from Q2 2021, and adjusted EBITDA of $66 million, up 10%. New ARR bookings rose 3% year-over-year, totaling $18 million, and 43% year-to-date. The bank segment revenue surged 24%, while the merchant segment revenue fell 2%. ACI expects Q3 revenue between $310 million and $325 million and reaffirms full-year guidance of $1.415 billion to $1.435 billion.

Positive

• Revenue growth of 13% year-over-year.
• Adjusted EBITDA up 10% year-over-year.
• New ARR bookings increased 3% compared to last year and 43% year-to-date.
• Strong performance in bank segment, with revenue up 24%.

Negative

• Merchant segment revenue decreased by 2%.
• Merchant segment adjusted EBITDA down by 41%.

Revenue of $340 million, up 13% versus Q2 2021

Adjusted EBITDA of $66 million, up 10% versus Q2 2021

New ARR bookings up 3% versus Q2 2021 and up 43% year to date

Net income of $13 million

Repurchased 1 million shares in Q2, $154 million remaining on authorization

Divestiture of Corporate Online Banking on track to close in Q3 2022

MIAMI--(BUSINESS WIRE)-- ACI Worldwide (NASDAQ: ACIW), the global leader in mission-critical, real-time payments software, announced financial results today for the quarter ended June 30, 2022. ACI delivered a strong second quarter, with revenue growth of 13% and adjusted EBITDA growth of 10% versus Q2 2021. New ARR^* bookings were up 3% versus Q2 2021 and up 43% on a year-to-date basis.

"We delivered another quarter of results in line with guidance, demonstrating the predictability, resilience and momentum of our growth. We continue the focused and disciplined execution of our three-pillar strategy – fit for growth, focused on growth and step-change value creation," said Odilon Almeida, president and CEO of ACI Worldwide.

"We expect the divestiture of our corporate online banking solutions to close in the third quarter. Our continuous, rigorous review of divestiture and acquisition opportunities to maximize shareholder value remains unchanged," Almeida concluded.

FINANCIAL SUMMARY

In Q2 2022, revenue was $340 million, up 13%, or 14% on a constant currency basis, from Q2 2021. Adjusted EBITDA in Q2 2022 was $66 million, up 10%, or 11% on a constant currency basis, from Q2 2021. Net adjusted EBITDA margin in Q2 2022 was 28% in the quarter, the same as in Q2 2021. Q2 new ARR bookings of $18 million were up 3% over Q2 2021 and up 43% year to date.

• Bank segment revenue increased 24%, or 27% on a constant currency basis, as bank segment adjusted EBITDA increased 29% on a reported and constant currency basis, versus Q2 2021.
• Merchant segment revenue decreased 2%, or increased 2% on a constant currency basis, while merchant segment adjusted EBITDA was down 41%, or 32% on a constant currency basis, versus Q2 2021.
• Biller segment revenue grew 8% on a reported and constant currency basis, whereas the biller segment adjusted EBITDA was down 18%, or 19% on a constant currency basis, versus Q2 2021.

ACI ended the quarter with $119 million in cash on hand and a debt balance of $1.1 billion, representing a net debt leverage ratio of 2.4X. The company has repurchased 2 million shares for $63 million year to date. As of June 30, 2022, ACI has $154 million remaining on its share repurchase authorization.

2022 FULL-YEAR AND Q3 GUIDANCE

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

We expect Q3 2022 revenue to be between $310 million and $325 million and adjusted EBITDA to be between $50 million and $65 million.

We plan to update Q3 and full-year 2022 guidance following the close of our corporate online banking solutions divestiture, which we expect to occur in the third quarter.

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 teleconference webcast at http://investor.aciworldwide.com/ or use the following number for dial-in participation: toll-free (888) 645-4404. Please provide your name and the conference name of ACI Worldwide, Inc.

About ACI Worldwide

ACI Worldwide is the global leader in mission-critical, real-time payments software. Our proven, secure and scalable software solutions enable leading corporations, fintechs, financial disruptors and merchants to process and manage digital payments, power omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with a local presence to drive the real-time digital transformation of payments and commerce.

© Copyright ACI Worldwide, Inc. 2022.

ACI, ACI Worldwide, ACI Payments, Inc., ACI Pay, Speedpay and all ACI product/solution names are trademarks or registered trademarks of ACI Worldwide, Inc., or one of its subsidiaries, in the United States, other countries or both. Other parties' trademarks referenced are the property of their respective owners.

To supplement our financial results presented on a GAAP basis, we use the non-GAAP measures indicated in the tables, which exclude significant transaction-related expenses, as well as other significant non-cash expenses such as depreciation, amortization, and stock-based compensation, that we believe are helpful in understanding our past financial performance and our future results. The presentation of these non-GAAP financial measures should be considered in addition to our GAAP results and are not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management generally compensates for limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP.

We believe that these non-GAAP financial measures reflect an additional way to view aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. Certain non-GAAP measures include:

• Adjusted EBITDA: net income (loss) plus income tax expense (benefit), net interest income (expense), net other income (expense), depreciation, amortization and stock-based compensation, as well as significant transaction-related expenses. Adjusted EBITDA should be considered in addition to, rather than as a substitute for, net income (loss).

• Net Adjusted EBITDA Margin: Adjusted EBITDA divided by revenue net of pass-through interchange revenue. Net Adjusted EBITDA Margin should be considered in addition to, rather than as a substitute for, net income (loss).

• Diluted EPS adjusted for non-cash and significant transaction related items: diluted EPS plus tax effected significant transaction related items, amortization of acquired intangibles and software, and non-cash stock-based compensation. Diluted EPS adjusted for non-cash and significant transaction related items should be considered in addition to, rather than as a substitute for, diluted EPS.

• Recurring revenue: revenue from software as a service and platform as a service fees and maintenance fees. Recurring revenue should be considered in addition to, rather than as a substitute for, total revenue.

• * Annual recurring revenue “ARR”' from new sales, defined as the 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) the predictability, resilience and momentum of our growth, (ii) the focused and disciplined execution of our three-pillar strategy – fit for growth, focused on growth and step-change value creation, (iii) expectations that the divestiture of our corporate online banking solutions will close in the third quarter, (iv) expectations regarding our continuous, rigorous review of divestiture and acquisition opportunities to maximize shareholder value, (v) expectations for full year 2022 revenue, adjusted EBITDA, net adjusted EBITDA margin, and (vi) expectations for Q3 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)
		June 30, 2022				December 31, 2021
ASSETS
Current assets
Cash and cash equivalents		$	118,953			$	122,059
Receivables, net of allowances			326,852				320,405
Settlement assets			549,019				452,396
Prepaid expenses			34,027				24,698
Other current assets			16,951				17,876
Total current assets			1,045,802				937,434
Noncurrent assets
Accrued receivables, net			268,075				276,164
Property and equipment, net			56,233				63,050
Operating lease right-of-use assets			40,833				47,825
Software, net			147,133				157,782
Goodwill			1,280,226				1,280,226
Intangible assets, net			261,782				283,004
Deferred income taxes, net			53,885				50,778
Other noncurrent assets			64,699				62,478
TOTAL ASSETS		$	3,218,668			$	3,158,741
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	41,084			$	41,312
Settlement liabilities			548,524				451,575
Employee compensation			40,076				51,379
Current portion of long-term debt			55,688				45,870
Deferred revenue			81,065				84,425
Other current liabilities			78,565				79,594
Total current liabilities			845,002				754,155
Noncurrent liabilities
Deferred revenue			31,231				25,925
Long-term debt			1,031,134				1,019,872
Deferred income taxes, net			30,982				36,122
Operating lease liabilities			35,120				43,346
Other noncurrent liabilities			36,835				34,544
Total liabilities			2,010,304				1,913,964
Commitments and contingencies
Stockholders’ equity
Preferred stock			—				—
Common stock			702				702
Additional paid-in capital			690,574				688,313
Retained earnings			1,160,113				1,131,281
Treasury stock			(528,758	)			(475,972	)
Accumulated other comprehensive loss			(114,267	)			(99,547	)
Total stockholders’ equity			1,208,364				1,244,777
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	3,218,668			$	3,158,741

ACI WORLDWIDE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited and in thousands, except per share amounts)
		Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Revenues
Software as a service and platform as a service		$	206,978			$	196,328			$	401,540			$	392,074
License			64,314				34,727				124,599				55,929
Maintenance			50,562				53,155				101,980				105,518
Services			18,571				17,459				35,386				33,334
Total revenues			340,425				301,669				663,505				586,855
Operating expenses
Cost of revenue (1)			179,333				158,614				345,619				318,099
Research and development			40,642				35,029				78,449				69,543
Selling and marketing			35,391				28,660				69,999				56,798
General and administrative			28,362				31,937				54,237				59,712
Depreciation and amortization			32,240				32,005				63,078				63,589
Total operating expenses			315,968				286,245				611,382				567,741
Operating income			24,457				15,424				52,123				19,114
Other income (expense)
Interest expense			(11,784	)			(11,260	)			(22,678	)			(22,735	)
Interest income			3,051				2,865				6,210				5,719
Other, net			2,006				1,434				4,256				52
Total other income (expense)			(6,727	)			(6,961	)			(12,212	)			(16,964	)
Income before income taxes			17,730				8,463				39,911				2,150
Income tax expense (benefit)			4,388				1,962				11,079				(2,406	)
Net income		$	13,342			$	6,501			$	28,832			$	4,556
Income per common share
Basic		$	0.12			$	0.06			$	0.25			$	0.04
Diluted		$	0.12			$	0.05			$	0.25			$	0.04
Weighted average common shares outstanding
Basic			114,669				117,718				114,976				117,605
Diluted			115,205				119,010				115,649				118,958
(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 June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Cash flows from operating activities:
Net income		$	13,342			$	6,501			$	28,832			$	4,556
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation			6,027				5,292				11,008				10,708
Amortization			26,213				28,111				52,721				56,278
Amortization of operating lease right-of-use assets			2,773				2,655				5,489				5,000
Amortization of deferred debt issuance costs			1,146				1,175				2,299				2,357
Deferred income taxes			(3,018	)			(3,480	)			(6,385	)			(9,558	)
Stock-based compensation expense			6,800				7,720				14,758				14,423
Other			523				542				1,124				436
Changes in operating assets and liabilities:
Receivables			(23,700	)			619				(14,040	)			76,754
Accounts payable			1,429				268				(1,319	)			(2,540	)
Accrued employee compensation			8,937				4,324				(10,201	)			(8,401	)
Deferred revenue			(4,417	)			(7,855	)			5,532				297
Other current and noncurrent assets and liabilities			2,834				(10,644	)			(22,055	)			(45,325	)
Net cash flows from operating activities			38,889				35,228				67,763				104,985
Cash flows from investing activities:
Purchases of property and equipment			(1,377	)			(3,729	)			(3,657	)			(8,075	)
Purchases of software and distribution rights			(4,531	)			(7,599	)			(10,738	)			(15,652	)
Net cash flows from investing activities			(5,908	)			(11,328	)			(14,395	)			(23,727	)
Cash flows from financing activities:
Proceeds from issuance of common stock			1,056				596				1,962				1,648
Proceeds from exercises of stock options			375				4,245				1,397				7,044
Repurchase of stock-based compensation awards for tax withholdings			(265	)			(590	)			(5,802	)			(14,796	)
Repurchases of common stock			(24,847	)			(39,411	)			(62,707	)			(39,411	)
Proceeds from revolving credit facility			20,000				—				60,000				—
Repayment of revolving credit facility			(10,000	)			(15,000	)			(20,000	)			(30,000	)
Repayment of term portion of credit agreement			(11,481	)			(9,737	)			(21,219	)			(19,475	)
Payments on or proceeds from other debt, net			(5,183	)			(4,672	)			(9,369	)			(8,272	)
Net decrease in settlement assets and liabilities			(3,970	)			(6,817	)			(3,970	)			(6,817	)
Net cash flows from financing activities			(34,315	)			(71,386	)			(60,313	)			(181,343	)
Effect of exchange rate fluctuations on cash			1,402				(347	)			(1,062	)			(388	)
Net increase (decrease) in cash and cash equivalents			68				(47,833	)			(8,007	)			(100,473	)
Cash and cash equivalents, including settlement deposits, beginning of period			176,067				212,742				184,142				265,382
Cash and cash equivalents, including settlement deposits, end of period		$	176,135			$	164,909			$	176,135			$	164,909
Reconciliation of cash and cash equivalents to the Consolidated Balance Sheets
Cash and cash equivalents		$	118,953			$	146,213			$	118,953			$	146,213
Settlement deposits			57,182				18,696				57,182				18,696
Total cash and cash equivalents		$	176,135			$	164,909			$	176,135			$	164,909

		Three Months Ended June 30,								Six Months Ended June 30,
Adjusted EBITDA (millions)		2022				2021				2022				2021
Net income		$	13.3			$	6.5			$	28.8			$	4.6
Plus:
Income tax expense (benefit)			4.4				2.0				11.1				(2.4	)
Net interest expense			8.8				8.4				16.5				17.0
Net other income (expense)			(2.0	)			(1.4	)			(4.3	)			(0.1	)
Depreciation expense			6.0				5.3				11.0				10.7
Amortization expense			26.2				28.1				52.7				56.3
Non-cash stock-based compensation expense			6.8				7.7				14.8				14.4
Adjusted EBITDA before significant transaction-related expenses		$	63.5			$	56.6			$	130.6			$	100.5
Significant transaction-related expenses:
Employee related actions			—				2.9				—				3.7
European datacenter migration			1.3				—				1.8				—
Divestiture transaction related			1.4				—				1.4				—
Other			—				0.5				—				0.9
Adjusted EBITDA		$	66.2			$	60.0			$	133.8			$	105.1
Revenue, net of interchange:
Revenue		$	340.4			$	301.7			$	663.5			$	586.9
Interchange			103.8				87.5				197.0				174.8
Revenue, net of interchange		$	236.6			$	214.2			$	466.5			$	412.1
Net Adjusted EBITDA Margin			28	%			28	%			29	%			26	%
		Three Months Ended June 30,								Six Months Ended June 30,
Segment Information (millions)		2022				2021				2022				2021
Revenue
Banks		$	141.9			$	114.1			$	274.1			$	210.0
Merchants			36.5				37.4				77.5				76.1
Billers			162.0				150.2				311.8				300.8
Total		$	340.4			$	301.7			$	663.4			$	586.9
Recurring Revenue
Banks		$	60.7			$	63.6			$	122.0			$	126.0
Merchants			34.9				35.7				69.7				70.9
Billers			161.9				150.2				311.8				300.7
Total		$	257.5			$	249.5			$	503.5			$	497.6
Segment Adjusted EBITDA
Banks		$	70.2			$	54.5			$	134.9			$	91.7
Merchants			7.8				13.0				22.5				27.8
Billers			28.3				34.6				54.7				68.6

		Three Months Ended June 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		$	0.12		$	13.3		$	0.05		$	6.5
Adjusted for:
Significant transaction-related expenses			0.02			2.1			0.02			2.6
Amortization of acquisition-related intangibles			0.06			6.9			0.06			7.1
Amortization of acquisition-related software			0.04			4.5			0.05			6.3
Non-cash stock-based compensation			0.05			5.2			0.05			5.9
Total adjustments		$	0.17		$	18.7		$	0.18		$	21.9
Diluted EPS adjusted for non-cash and significant transaction-related items		$	0.29		$	32.0		$	0.23		$	28.4
		Six Months Ended June 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		$	0.25		$	28.8		$	0.04		$	4.6
Adjusted for:
Significant transaction-related expenses			0.02			2.4			0.03			3.5
Amortization of acquisition-related intangibles			0.12			13.9			0.12			14.1
Amortization of acquisition-related software			0.08			9.6			0.11			13.0
Non-cash stock-based compensation			0.10			11.2			0.09			11.0
Total adjustments		$	0.32		$	37.1		$	0.35		$	41.6
Diluted EPS adjusted for non-cash and significant transaction-related items		$	0.57		$	65.9		$	0.39		$	46.2

		Three Months Ended June 30,						Six Months Ended June 30,
Recurring Revenue (millions)		2022			2021			2022			2021
SaaS and PaaS fees		$	206.9		$	196.3		$	401.5		$	392.1
Maintenance fees			50.6			53.2			102.0			105.5
Recurring Revenue		$	257.5		$	249.5		$	503.5		$	497.6
Annual Recurring Revenue* (ARR) Bookings (millions)		Three Months Ended June 30,						Six Months Ended June 30,
		2022			2021			2022			2021
ARR bookings		$	18.1		$	17.6		$	39.2		$	27.3

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005055/en/

Investors

John Kraft

SVP, Head of Strategy and Finance

john.kraft@aciworldwide.com

Source: ACI Worldwide

FAQ

What were ACI Worldwide's Q2 2022 revenue and adjusted EBITDA results?

ACI Worldwide reported Q2 2022 revenue of $340 million and adjusted EBITDA of $66 million.

How did new ARR bookings perform in Q2 2022?

New ARR bookings in Q2 2022 increased by 3% compared to Q2 2021, totaling $18 million.

What is ACI Worldwide's full-year guidance for 2022?

ACI Worldwide expects full-year revenue growth in the mid-single digits, within the range of $1.415 billion to $1.435 billion.

What does ACI Worldwide project for Q3 2022 revenue?

ACI Worldwide anticipates Q3 2022 revenue to be between $310 million and $325 million.