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ACI Worldwide, Inc. Reports Financial Results for the Quarter Ended June 30, 2021

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Q2 HIGHLIGHTS

  • Recurring revenue of $250 million, up 7% from Q2 2020

  • Revenue of $302 million, up 1% from Q2 2020

  • Signed multi-year strategic alliance with Microsoft to deliver best-in-class cloud-based payment solutions

  • Repurchased 1 million shares and paid down $25 million in debt

  • Introducing 2021 revenue guidance and reaffirming 2021 adjusted EBITDA guidance

MIAMI, August 05, 2021--(BUSINESS WIRE)--ACI Worldwide (NASDAQ: ACIW), a leading global provider of real-time electronic payment solutions and software, today announced financial results for the quarter ended June 30, 2021.

"We had another solid quarter, coming in at the high end of our expectations. Encouragingly, both our global sales organization and our pipeline continue to strengthen while our business becomes more predictable," said Odilon Almeida, president and CEO of ACI Worldwide. "In the quarter, we signed a significant number of new logos and secured important strategic wins. We also signed a global alliance with Microsoft Azure, which will accelerate and expand ACI’s best-in-class cloud payment offerings. This partnership will enable stronger go-to-market cooperation between the two companies to meet the increasing demand for SaaS-based payment solutions from financial institutions. Also among the quarter’s signings was a major Real-Time payments win with the Central Bank of Indonesia, further cementing ACI’s lead in this fast-growing segment."

Mr. Almeida concluded, "We expect to continue this momentum in the second half of 2021 and as the economic backdrop improves, plan to end the year at a significantly higher growth rate. Importantly, this will allow us to achieve the Rule of 40 in 2021 for the first year ever. I am increasingly confident that our three-pillar strategy is taking hold and we remain committed to maximizing shareholder value."

Q2 2021 FINANCIAL SUMMARY

Recurring revenue was $250 million, up 7% from Q2 2020. Total revenue in the quarter was $302 million, up 1% compared to Q2 2020.

Recurring revenue grew in all segments compared to Q2 2020. Bank segment recurring revenue increased 2% and Bank segment adjusted EBITDA decreased 20%, versus Q2 2020. Merchant segment recurring revenue increased 5% and Merchant segment adjusted EBITDA increased 2%, versus Q2 2020. Biller segment recurring revenue grew 9% and Biller segment adjusted EBITDA increased 1%, versus Q2 2020.

Total adjusted EBITDA in the quarter was $60 million compared to $78 million in Q2 2020, largely due to the timing of non-recurring, high-margin license renewals. Net adjusted EBITDA margin was 28% in the quarter, compared to 35% in Q2 2020. Net income in the quarter of $7 million declined compared to net income of $14 million in Q2 2020.

Cash flows from operating activities in the quarter were $38 million, down from $68 million in Q2 2020. ACI ended the quarter with $146 million in cash on hand and $474 million available on our credit facility after paying down $25 million in debt in the quarter. The company repurchased 1 million shares during the quarter.

INTRODUCING 2021 REVENUE GUIDANCE; REAFFIRMING 2021 ADJUSTED EBITDA GUIDANCE

For the full year 2021, we expect revenue to be in a range of $1.335 billion to $1.345 billion and we continue to expect adjusted EBITDA to be in the range of $375 million to $385 million with net adjusted EBITDA margin expansion. We expect revenue to be between $310 million and $320 million and adjusted EBITDA of $70 million to $80 million in Q3 2021.

CONFERENCE CALL TO DISCUSS FINANCIAL RESULTS

Management will host a conference call at 8:30 am ET today to discuss these results. Interested persons may access a real-time webcast of the teleconference at http://investor.aciworldwide.com/ or use the following numbers for dial-in participation: toll-free: (888) 771-4371, toll: +1 (847) 585-4405. Please provide your name, the conference name of ACI Worldwide, Inc. and confirmation number 50201377.

About ACI Worldwide

ACI Worldwide is a global software company that provides mission-critical real-time payment solutions to corporations. Customers use our proven, scalable and secure solutions to process and manage digital payments, enable omni-commerce payments, present and process bill payments, and manage fraud and risk. We combine our global footprint with local presence to drive the real-time digital transformation of payments and commerce.

© Copyright ACI Worldwide, Inc. 2021.

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

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

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

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

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

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

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

FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements based on current expectations that involve a number of risks and uncertainties. Generally, forward-looking statements do not relate strictly to historical or current facts and may include words or phrases such as "believes," "will," "expects," "anticipates," "intends," and words and phrases of similar impact. The forward-looking statements are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements in this press release include, but are not limited to, expectations regarding: (i) both our global sales organization and our pipeline strengthening considerably, while our business becomes more predictable, (ii) a global alliance with Microsoft Azure, which will accelerate and expand ACI’s best-in-class cloud payment offerings, (iii) continuing this momentum in the second half of 2021 and as the economic backdrop improves, plan to end the year at a significantly higher growth rate, (iv) the achievement the rule of 40 in 2021 for the first year ever, and (v) full year 2021 and Q3, 2021 financial guidance 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, the COVID-19 pandemic, increased competition, business interruptions or failure of our information technology and communication systems, may be subjected to security breaches or viruses, our ability to attract and retain senior management personnel and skilled technical employees, new members of senior management coupled with our headquarters relocation, future acquisitions, strategic partnerships and investments, integration of and achieving benefits from the Speedpay acquisition, implementation and success of our new Three Pillar strategy, impact if we convert some or all on-premise licenses from fixed-term to subscription model, anti-takeover provisions, exposure to credit or operating risks arising from certain payment funding methods, customer reluctance to switch to a new vendor, our ability to adequately defend our intellectual property, litigation, our offshore software development activities, risks from operating internationally, including fluctuations in currency exchange rates, adverse changes in the global economy, compliance of our products with applicable legislation, governmental regulations and industry standards, the complexity of our products and services and the risk that they may contain hidden defects, complex regulations applicable to our payments business, our compliance with privacy regulations, exposure to unknown tax liabilities, consolidations and failures in the financial services industry, volatility in our stock price, demand for our products, failure to obtain renewals of customer contracts or to obtain such renewals on favorable terms, delay or cancellation of customer projects or inaccurate project completion estimates, impairment of our goodwill or intangible assets, the accuracy of management’s backlog estimates, the cyclical nature of our revenue and earnings and the accuracy of forecasts due to the concentration of revenue-generating activity during the final weeks of each quarter, restrictions and other financial covenants in our debt agreements, our existing levels of debt, potential adverse effects from the impending replacement of LIBOR, events outside of our control including natural disasters, wars, and outbreaks of disease. For a detailed discussion of these risk factors, parties that are relying on the forward-looking statements should review our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q.

ACI WORLDWIDE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

June 30,

2021

December 31,

2020

ASSETS

Current assets

Cash and cash equivalents

$

146,213

$

165,374

Receivables, net of allowances

289,351

342,879

Settlement assets

486,983

605,008

Prepaid expenses

31,258

24,288

Other current assets

31,425

17,365

Total current assets

985,230

1,154,914

Noncurrent assets

Accrued receivables, net

190,399

215,772

Property and equipment, net

61,527

64,734

Operating lease right-of-use assets

51,511

41,243

Software, net

180,873

196,456

Goodwill

1,280,226

1,280,226

Intangible assets, net

303,151

321,983

Deferred income taxes, net

64,857

57,476

Other noncurrent assets

57,406

54,099

TOTAL ASSETS

$

3,175,180

$

3,386,903

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable

$

37,899

$

41,223

Settlement liabilities

489,302

604,096

Employee compensation

39,894

48,560

Current portion of long-term debt

36,067

34,265

Deferred revenue

97,503

95,849

Other current liabilities

65,794

81,612

Total current liabilities

766,459

905,605

Noncurrent liabilities

Deferred revenue

32,524

33,564

Long-term debt

1,071,822

1,120,742

Deferred income taxes, net

35,208

40,504

Operating lease liabilities

48,008

39,958

Other noncurrent liabilities

42,599

39,933

Total liabilities

1,996,620

2,180,306

Commitments and contingencies

Stockholders’ equity

Preferred stock

Common stock

702

702

Additional paid-in capital

676,399

682,431

Retained earnings

1,008,046

1,003,490

Treasury stock

(412,492

)

(387,581

)

Accumulated other comprehensive loss

(94,095

)

(92,445

)

Total stockholders’ equity

1,178,560

1,206,597

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

3,175,180

$

3,386,903

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,

2021

2020

2021

2020

Revenues

Software as a service and platform as a service

$

196,328

$

180,573

$

392,074

$

373,523

License

34,727

50,136

55,929

78,265

Maintenance

53,155

52,749

105,518

106,029

Services

17,459

16,452

33,334

33,578

Total revenues

301,669

299,910

586,855

591,395

Operating expenses

Cost of revenue (1)

158,614

147,346

318,099

313,183

Research and development

35,029

35,578

69,543

74,602

Selling and marketing

28,660

24,455

56,798

54,538

General and administrative

31,937

29,758

59,712

65,684

Depreciation and amortization

32,005

33,635

63,589

65,533

Total operating expenses

286,245

270,772

567,741

573,540

Operating income

15,424

29,138

19,114

17,855

Other income (expense)

Interest expense

(11,260

)

(14,142

)

(22,735

)

(31,313

)

Interest income

2,865

2,954

5,719

5,854

Other, net

1,434

2,041

52

(7,717

)

Total other income (expense)

(6,961

)

(9,147

)

(16,964

)

(33,176

)

Income (loss) before income taxes

8,463

19,991

2,150

(15,321

)

Income tax expense (benefit)

1,962

5,916

(2,406

)

(4,969

)

Net income (loss)

$

6,501

$

14,075

$

4,556

$

(10,352

)

Income (loss) per common share

Basic

$

0.06

$

0.12

$

0.04

$

(0.09

)

Diluted

$

0.05

$

0.12

$

0.04

$

(0.09

)

Weighted average common shares outstanding

Basic

117,718

116,033

117,605

116,019

Diluted

119,010

117,264

118,958

116,019

(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,

2021

2020

2021

2020

Cash flows from operating activities:

Net income (loss)

$

6,501

$

14,075

$

4,556

$

(10,352

)

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

Depreciation

5,292

5,927

10,708

11,752

Amortization

28,111

29,765

56,278

57,762

Amortization of operating lease right-of-use assets

2,655

5,245

5,000

8,801

Amortization of deferred debt issuance costs

1,175

1,204

2,357

2,416

Deferred income taxes

(3,480

)

5,671

(9,558

)

(4,742

)

Stock-based compensation expense

7,720

7,932

14,423

14,882

Other

542

1,122

436

1,772

Changes in operating assets and liabilities:

Receivables

619

(19,646

)

76,754

29,053

Accounts payable

268

12,374

(2,540

)

6,287

Accrued employee compensation

4,324

1,192

(8,401

)

8,177

Deferred revenue

(7,855

)

(259

)

297

22,236

Other current and noncurrent assets and liabilities

(7,779

)

3,427

(42,094

)

(22,515

)

Net cash flows from operating activities

38,093

68,029

108,216

125,529

Cash flows from investing activities:

Purchases of property and equipment

(3,729

)

(7,018

)

(8,075

)

(10,615

)

Purchases of software and distribution rights

(7,599

)

(8,516

)

(15,652

)

(15,057

)

Net cash flows from investing activities

(11,328

)

(15,534

)

(23,727

)

(25,672

)

Cash flows from financing activities:

Proceeds from issuance of common stock

596

947

1,648

1,894

Proceeds from exercises of stock options

4,245

722

7,044

1,122

Repurchase of stock-based compensation awards for tax withholdings

(590

)

(151

)

(14,796

)

(11,124

)

Repurchases of common stock

(39,411

)

(39,411

)

(28,881

)

Proceeds from revolving credit facility

30,000

Repayment of revolving credit facility

(15,000

)

(30,000

)

(30,000

)

(69,000

)

Repayment of term portion of credit agreement

(9,737

)

(9,738

)

(19,475

)

(19,475

)

Payments on or proceeds from other debt, net

(4,672

)

(1,093

)

(8,272

)

(4,686

)

Net cash flows from financing activities

(64,569

)

(39,313

)

(103,262

)

(100,150

)

Effect of exchange rate fluctuations on cash

(347

)

(3,083

)

(388

)

8,118

Net increase (decrease) in cash and cash equivalents

(38,151

)

10,099

(19,161

)

7,825

Cash and cash equivalents, beginning of period

184,364

119,124

165,374

121,398

Cash and cash equivalents, end of period

$

146,213

$

129,223

$

146,213

$

129,223

Adjusted EBITDA (millions)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net income (loss)

$

6.5

$

14.1

$

4.6

$

(10.4

)

Plus:

Income tax expense (benefit)

2.0

5.9

(2.4

)

(5.0

)

Net interest expense

8.4

11.2

17.0

25.5

Net other (income) expense

(1.4

)

(2.0

)

(0.1

)

7.7

Depreciation expense

5.3

5.9

10.7

11.8

Amortization expense

28.1

29.8

56.3

57.8

Non-cash stock-based compensation expense

7.7

7.9

14.4

14.9

Adjusted EBITDA before significant transaction-related expenses

56.6

72.8

100.5

102.3

Significant transaction-related expenses:

Employee related actions

2.9

3.7

8.2

Facility closures

1.8

1.8

Other

0.5

3.2

0.9

3.5

Adjusted EBITDA

$

60.0

$

77.8

$

105.1

$

115.8

Revenue, net of interchange:

Revenue

$

301.7

$

299.9

$

586.9

$

591.4

Interchange

87.5

74.8

174.8

163.6

Revenue, net of interchange

$

214.2

$

225.1

$

412.1

$

427.8

Net Adjusted EBITDA Margin

28

%

35

%

26

%

27

%

Segment Information (millions)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenue

Banks

$

114.1

$

125.4

$

210.0

$

231.2

Merchants

37.4

37.3

76.1

69.1

Billers

150.2

137.2

300.8

291.1

Total

$

301.7

$

299.9

$

586.9

$

591.4

Recurring Revenue

Banks

$

63.6

$

62.2

$

126.0

$

124.8

Merchants

35.7

33.9

70.9

63.8

Billers

150.2

137.2

300.7

291.0

Total

$

249.5

$

233.3

$

497.6

$

479.6

Segment Adjusted EBITDA

Banks

$

54.5

$

68.4

$

91.7

$

110.8

Merchants

13.0

12.8

27.8

19.3

Billers

34.6

34.3

68.6

64.5

EPS Impact of Non-cash and Significant Transaction-related Items (millions)

Three Months Ended June 30,

2021

2020

EPS Impact

$ in Millions

(Net of Tax)

EPS Impact

$ in Millions

(Net of Tax)

GAAP net income

$

0.05

$

6.5

$

0.12

$

14.1

Adjusted for:

Significant transaction-related expenses

0.02

2.6

0.03

3.5

Amortization of acquisition-related intangibles

0.06

7.1

0.06

7.0

Amortization of acquisition-related software

0.05

6.3

0.07

8.1

Non-cash stock-based compensation

0.05

5.9

0.05

6.0

Total adjustments

0.18

21.9

0.21

24.6

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

$

0.23

$

28.4

$

0.33

$

38.7

EPS Impact of Non-cash and Significant Transaction-related Items (millions)

Six Months Ended June 30,

2021

2020

EPS Impact

$ in Millions

(Net of Tax)

EPS Impact

$ in Millions

(Net of Tax)

GAAP net income (loss)

$

0.04

$

4.6

$

(0.09

)

$

(10.4

)

Adjusted for:

Significant transaction-related expenses

0.03

3.5

0.09

10.3

Amortization of acquisition-related intangibles

0.12

14.1

0.12

14.1

Amortization of acquisition-related software

0.11

13.0

0.14

16.1

Non-cash stock-based compensation

0.09

11.0

0.10

11.3

Total adjustments

0.35

41.6

0.45

51.8

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

$

0.39

$

46.2

$

0.36

$

41.4

Recurring Revenue (millions)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

SaaS and PaaS fees

$

196.3

$

180.6

$

392.1

$

373.5

Maintenance fees

53.2

52.7

105.5

106.0

Recurring Revenue

$

249.5

$

233.3

$

497.6

$

479.5

Annual Recurring Revenue (ARR) Bookings (millions)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

ARR bookings

$

17.6

$

21.4

$

27.3

$

34.9

View source version on businesswire.com: https://www.businesswire.com/news/home/20210805005175/en/

Contacts

Investors
John Kraft
john.kraft@aciworldwide.com

Media
Dan Ring
dan.ring@aciworldwide.com