U.S. Markets open in 6 hrs 50 mins

Edited Transcript of ACIW earnings conference call or presentation 9-May-19 12:30pm GMT

Q1 2019 ACI Worldwide Inc Earnings Call

NEW YORK May 20, 2019 (Thomson StreetEvents) -- Edited Transcript of ACI Worldwide Inc earnings conference call or presentation Thursday, May 9, 2019 at 12:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* John Kraft

ACI Worldwide, Inc. - VP,IR & Strategic Analysis

* Philip George Heasley

ACI Worldwide, Inc. - CEO, President & Director

* Scott W. Behrens

ACI Worldwide, Inc. - Senior EVP, CFO & CAO

================================================================================

Conference Call Participants

================================================================================

* Brett Richard Huff

Stephens Inc., Research Division - MD

* David Luke Eller

Wells Fargo Securities, LLC, Research Division - Associate Analyst

* George Frederick Sutton

Craig-Hallum Capital Group LLC, Research Division - Partner, Co-Director of Research & Senior Research Analyst

* Peter James Heckmann

D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good morning, Ladies and gentlemen. My name is Jerome, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Reports First Quarter Earnings Conference Call. (Operator Instructions)

Now it's my pleasure to hand the call over to your host, Mr. John Kraft. The floor is yours.

--------------------------------------------------------------------------------

John Kraft, ACI Worldwide, Inc. - VP,IR & Strategic Analysis [2]

--------------------------------------------------------------------------------

Thank you, Jerome, and good morning, everybody. Today's call like all of our events is subject to both safe harbor and forward-looking statements. You could find the full text of both statements on the first and final pages of our presentation deck today, a copy of which is available on our website as well as with the SEC.

On this morning's call is Phil Heasley, our CEO; and Scott Behrens, our CFO.

With that, I'd like to turn the call over to Phil.

--------------------------------------------------------------------------------

Philip George Heasley, ACI Worldwide, Inc. - CEO, President & Director [3]

--------------------------------------------------------------------------------

Thank you, John, and thank you, everyone, for joining today's call. I'm pleased to start off by saying that this morning we announced the completion of the acquisition of Speedpay from Western Union. I will spend the next few minutes covering both the immediate as well as longer-term strategic opportunities for ACI made available as a result of the Speedpay acquisition. Next, I'll share a sampling of Q1 wins and demonstrate momentum across our key bank, intermediary, merchant and corporate customer segments. I will then turn the call over to Scott to cover our Q1 financial results and updated 2019 guidance.

Let me start by saying that the acquisition of Speedpay is exciting and significant to ACI on several levels. First, it brings immediate financial strength and scale to our ACI On Demand platform business. With our investment phase largely behind us, ACI On Demand has turned the corner to profitability and delivered its first full year of positive EBITDA in 2018. The acquisition brings together 2 market-leading U.S. bill payment portfolios with the combined revenue of over $600 million in 2018. The acquisition brings tremendous scale to our ACI On Demand business. It enhances our profitability, boosts recurring revenues, drives efficiencies and enables increased investments in R&D and platform infrastructure that will benefit our entire UP portfolio.

We plan to combine the Speedpay and ACI Bill Payments solutions into a unified platform capable of supporting billions of transactions and driving next-generation bill pay capabilities. We will also expand our reach into existing and complementary segments such as consumer finance, insurance, healthcare, higher education, utilities, government and mortgage. The combination of Speedpay and ACI is also exciting as it brings together the industry's top talent under one roof. As we join forces, we will drive innovation and revolutionize payment for thousands of customers.

I want to take this opportunity to welcome our Speedpay colleagues and clients into the one ACI family. We are honored to be working with you.

Strategically moving forward, this acquisition also accelerates the delivery of ACI's Any Payment, Every Possibility vision to serve a broader opportunity, real-time digital payment experience of merchants, corporates and billers. The lines are blurring as the needs of these segments are rapidly converging driven by the adoption of digital and mobile channels, the move to real-time non-card payments and the growth of digital subscriptions and recurring payments. We're all likely familiar with the explosion of choices and the increasing number of recurring services that are now an integral part of a typical consumer's daily experience, from streaming media and digital marketplaces to subscription-based home deliveries. Providing a real-time, frictionless and secure digital payment experience is critical to vendors that want to capitalize on this market opportunity.

ACI anticipates the strength will continue to accelerate across the consumer and B2B markets. And we've architected our UP solution portfolio to be ready to help our customers serve these digital payment business models. Our investment in R&D continues to outpace the competition, and we've built important new digital payment capabilities for e-commerce, merchant omnichannel, real-time payments and payments intelligence over the last 12 months.

In conjunction with our Speedpay acquisition, we acquired Walletron. Walletron provides innovative mobile wallet payment and loyalty capabilities. Now as part of ACI's UP portfolios, consumers can build -- can view bills and make quicker payments right from their Apple Wallet or Google Pay on their smartphones. Said a little differently, we now can connect iOS or Android to a wallet experience.

We have a lot more to share about this real-time digital payment experience vision and our UP solutions portfolio, and we will be hosting a special analyst webcast briefing on Tuesday, May 21, at 2 p.m. Eastern Time for those who want to learn. We will present our strategy for addressing and capitalizing on the rapidly growing and fast-evolving real-time digital payments opportunity. We'll share how ACI is differentiated not only for our universal payment software leadership but also for our agnostic support of multiple payment methods and channels.

I'll now turn to the highlights from quarter 1 for new customer wins and renewals, starting with our corporate segment serving billing customers.

But first, MFTX is a foreign exchange and payment solution provider that serves clients ranging from individuals to large multinational corporations. MFTX selected ACI's UP Bill Payment Solution to handle transactions within the United States for its higher education clients.

In related news, this quarter, we also unveiled the new ACI student payment portal. The new campus commerce solutions simplifies payments while improving security for higher education institutions.

Turning now to wins in the merchant and intermediary segments. I'm pleased to announce that we've expanded our relationship with WorldPay, a provider of secure payment services to merchants across 164 countries globally and in 15 different currencies. As WorldPay expands its services, the company has selected UP eCommerce payments to help manage an extensive alternate payment merchant network.

Acapture, a leading payment service provider and longtime ACI customer based in the Netherlands, also selected UP eCommerce payment as the company expands its reach across key vertical segments.

Ronghan International (HK) Limited, a financial services company in Hong Kong, selected UP eCommerce payments for online payments and fraud control. Global Tel Link, a leading telecommunications company has selected ACI's ReD Shield for fraud screening across the government and other contracted facilities.

Shifting to the banking segment. ACI continues to see strong momentum for our UP Retail Payments and UP Real-Time Payments solutions. Wells Fargo, one of the country's largest financial services company, has expanded its relationship with ACI. ACI powers Wells Fargo's domestic and global wire operations.

In addition, ALTO, a leading interbank switch in Indonesia, is expanding its payments capability using UP Retail Payments solution as digital payment adoption accelerates in Indonesia, ACI's UP Payments solution empowers ALTO to capture growing market opportunity.

One of the big 4 banks in the People's Republic of China has selected ACI's UP Real-time Payment solution to improve operational efficiency and lower total cost of ownership for its New York branch operations. The bank will upgrade the Linux version of money transfer system and will move to commodity hardware.

Finally, I'm pleased to share that ACI continues to win industry accolades. Earlier this quarter, ACI was recognized as the best payment solutions provider in Europe at the 2018 Global Banking and Finance Awards.

UP eCommerce payments was also awarded for its technical flexibility and cross-border capabilities.

Before I hand it off to Scott, I want to reiterate that ACI is well positioned for growth in 2019 and beyond. With the strong new bookings pipeline and the strategic acquisition of Speedpay, ACI is poised to capture even more quickly on the growing number of payment transactions occurring around the world each day. We're on track financially for the year, and we're updating our guidance for 2019.

I'll now turn it over to Scott to provide additional financial detail. Thank you.

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [4]

--------------------------------------------------------------------------------

Thanks, Phil. Good morning, everyone. I first plan to go through our results for Q1 and then provide an update for the full year 2019, given the acquisition of Speedpay that we completed today. We'll then open the line for questions.

I'll be starting my comments on Slide 7 with key takeaways from the quarter.

New bookings were $70 million and total bookings were $112 million. Recall that Q1 saw particularly tough comparison given our record bookings in Q1 last year. We continue to expect full year in bookings to increase in the upper single to low double digits with our quarterly phasing of bookings for this year following our more traditional pattern with Q3 and Q4 being the highest bookings quarters for the year.

We ended Q1 with a 12-month backlog of $811 million and a 60-month backlog of $4.2 billion. Q1 revenue came in within our guidance expectations at $206 million with our On Demand business growing 5% over Q1 last year offset by lower revenue in our On Premise business. The decline in the On Premise business was due to the timing and size of renewal and capacity events in Q1 2019 compared to Q1 2018.

The timing of our nonrecurring license fee revenue will follow the expected timing of our bookings this year, as I mentioned, which will be heaviest in Q3 and Q4 this year. Revenue growth in our On Demand business contributed to strong improvement in net EBITDA margins. As we've been saying for some time now, margin expansion will come with scale as we grow into the infrastructure that we built out here over the last several years. As you recall, 2018 was really the turning point when we started to see that margin expansion in our On Demand segment. And we see continued margin expansion here in Q1 with net EBITDA margins increasing 600 basis points over Q1 of 2018, and that driven by a combination of both revenue growth and lower expenses. And the contribution of Speedpay will allow us to accelerate that scale by layering on revenue and EBITDA on top of that leverageable infrastructure.

ACI's On Premise segment revenue is $96 million versus $105 million last year, which again was due to the timing of nonrecurring license fees. On Premise segment adjusted EBITDA margin was 29% versus 37% last year as these nonrecurring revenues generally have very high incremental margin.

Adjusted operating free cash flow was $35 million, essentially flat with Q1 2018. We ended the quarter with $176 million in cash and $679 million in debt.

For the acquisition of Speedpay, we do expect the pro forma net debt-to-EBITDA ratio to step up to just under 4x and then a significant free cash flow generation of the combined business should allow us to delever quickly. We expect within 24 months our debt-to-EBITDA ratio to generally be in line with our targeted leverage ratio of 2.5x.

And lastly here we have $176 million remaining on our share repurchase authorization.

Turning next to Slide 8 with our update -- updated 2019 guidance. In addition to announcing the completion of the Speedpay acquisition, we do remain on track for delivering our financial guidance for the year. We are updating our outlook for the full year 2019 given the contribution from Speedpay. We expect Speedpay to contribute between $215 million and $220 million in revenue and between $50 million and $55 million in adjusted EBITDA for the remainder of 2019.

We now expect 2019 total revenue to be in a range of $1.315 billion to $1.345 billion and adjusted EBITDA to be in the range of $360 million to $380 million, which excludes between $30 million and $35 million in onetime transaction and integration-related expenses. Also important to note here is the Speedpay's 100% recurring revenue model will improve our combined recurring revenue from approximately 65% of total revenue today to near 75% on a pro forma basis. So this higher base of recurring revenue and its correlating recurring EBITDA should help reduce some of the quarterly volatility we see driven by the timing of our nonrecurring license fees.

We continue to expect new bookings growth to be in the upper single to low double digits. Operating free cash flow in 2019 is expected to be in a range of $190 million to $200 million.

We are also updating here our 2020 EBITDA outlook for the impact of Speedpay. So we're increasing our targeted EBITDA range to $425 million to $445 million, up from our prior expectation of $335 million to $350 million.

Finally, we expect to generate between $280 million and $290 million of revenue in the second quarter. And note that this range does not include the impact of carryover deals from 2018. We expect most likely timing of these in Q3. But if they do sign in Q2, it will be upside of this range. And to help with your modeling, you'll find additional guidance assumptions on Slide 9. I don't plan to review those in detail, but notice they've all been updated for the impact of Speedpay.

And lastly, as a reminder of the acquisition of Speedpay was structured as an asset purchase for U.S. tax purposes pursuant to the Section 338(h)(10) election. As a result, ACI will be able to amortize any goodwill and intangibles associated with the acquisition, which we estimate the net present value of this tax benefit to be approximately $100 million.

So that concludes my prepared remarks. Operator, we are ready to open the line for questions at this time.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Your first question comes from the line of George Sutton from Craig-Hallum.

--------------------------------------------------------------------------------

George Frederick Sutton, Craig-Hallum Capital Group LLC, Research Division - Partner, Co-Director of Research & Senior Research Analyst [2]

--------------------------------------------------------------------------------

Congrats on getting the Speedpay acquisition closed. Honestly, don't remember such an attractive acquisition. I wanted to focus, if I could, on the slide that you had on Page 5 -- or the chart you had on Page 5 relative to the Bill Pay market, and the portions that you're going to begin to focus on. Just to be clear, you're talking about those upper 2 areas of opportunity, which are the faster-growing parts of the market. And are those completely new to you with this acquisition?

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [3]

--------------------------------------------------------------------------------

Yes. No, I mean ultimately, the digital subscription services and the digital subscription on physical goods will both be -- that -- those are in areas where we will be able to expend additional R&D resources. Remember, we're combining 2 sets of R&D spend, and on top of that, we're actually investing more in R&D to be able to go and tackle and build out capabilities for some of these higher-growth Bill Payment markets.

--------------------------------------------------------------------------------

Philip George Heasley, ACI Worldwide, Inc. - CEO, President & Director [4]

--------------------------------------------------------------------------------

So, George, it's great question because what this does is -- subscription is a wonderful example of explaining what the UP strategy is all about. So PAY. ON's ability to have this diverse global network of endpoint, our real-time business intelligence broad capabilities and the ability to sit behind the corporate or the -- so now they have the ability -- it's not Bill Pay kind of in the traditional way where people think about it. It's in effect, providing the set of rails both to endpoint -- both to the endpoint and to the intermediate tests that have to take place. And if the form of subscription has a low unit cost or something, it cannot afford to be an interchange kind of payment or whatever. Or if immediate payments really start taking off as a pushed credit and whatnot, it provides another channel for people to -- and a lot of the merchant acquirers are beginning to see this need. And we're actually having more conversations with merchant acquirers and corporations about this than we're having with banks with our more traditional banking segment. In a way, it makes sense because a lot of these alternate payment fees are -- don't come from the bank -- directly from the banking community or they're coming in from overseas.

--------------------------------------------------------------------------------

George Frederick Sutton, Craig-Hallum Capital Group LLC, Research Division - Partner, Co-Director of Research & Senior Research Analyst [5]

--------------------------------------------------------------------------------

Understand. Obviously, a lot of things driving the business right now. So Scott, can you just give us the composition of Speedpay in the Q2 numbers that you discussed, the $280 million to $290 million. And I'm asking that really to get a better sense of the progress you've seen thus far in Q2.

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [6]

--------------------------------------------------------------------------------

Yes. We closed today, so we'll be picking up their financial results effective today going forward. I would really prorate what we're putting out for the full year, just take it pretty equally between today and the end of the year. Their -- the Speedpay business's portfolio is not as lumpy as in some cases ours. Our biller business has a certain bit of seasonality in it because of the heavy portion is in government tax payments. So Q2 on our side can be -- actually can be one of the higher quarter of the year. But this portfolio with Speedpay is actually pretty normalized throughout the year. So I'd take our total just spread it over the rest of the year.

--------------------------------------------------------------------------------

Operator [7]

--------------------------------------------------------------------------------

Your next question comes from the line of Brett Huff from Stephens.

--------------------------------------------------------------------------------

Brett Richard Huff, Stephens Inc., Research Division - MD [8]

--------------------------------------------------------------------------------

Congrats on getting the deal done. Also echo seems like a really nice deal. Two questions for me. Number one, can you give us more detail on sort of the tenure and the timing of bookings? I know we -- the renewals -- there's a couple of big renewals that got pushed from 4Q I think, but as you mentioned, from sort of capital markets activity. Sounds like that's still supposed to -- those are expected to close in the 3Q, but the bookings this quarter were a little lighter than we expected. I know there's -- those can naturally be lumpy, but just wanted to get some insight into that. How's the pipeline looking? Do we kind of -- can you just give us some color on kind of how we get to the high single or low double-digit growth for the year?

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [9]

--------------------------------------------------------------------------------

Yes. I would say that you got a couple of dynamics. Number one, again, and I mentioned in my prepared remarks that if you look at it from a comp perspective, Q1 of last year was a record Q1 quarter for us. So certainly, on a comp basis. I think this year will look more traditional in terms of the timing of our bookings with a lot of it sitting out there in Q3 and Q4. So -- and I think it just -- there's a natural get-back a little bit after coming off the year where we had over 20% growth in new bookings to have a little bit of slowdown here in first quarter. But the pipeline is strong and so we're comfortable with that high single to low double digits for the full year.

--------------------------------------------------------------------------------

Brett Richard Huff, Stephens Inc., Research Division - MD [10]

--------------------------------------------------------------------------------

Okay. Great. And my second is, Phil, I think you mentioned combining platforms between your existing Bill Pay business and Speedpay's. Can you give us some more sense on that? Is it -- whose platform is going to remain or is it going to be kind of best of both? And what's the timing of that? And how do we think about any financial benefits? Is that included in the guidance you've given or is that on top of?

--------------------------------------------------------------------------------

Philip George Heasley, ACI Worldwide, Inc. - CEO, President & Director [11]

--------------------------------------------------------------------------------

That's a great question. Actually, it's kind of a great marriage. Western Union Speedpay has done a lot of very good work on the front end of their system -- of their product, which is -- they're calling Next Gen. And they really included their customer base and the marketplace in terms of what Next Gen should look like and whatnot. And we are going to embrace the vast majority of what Next Gen has to offer. We have things like our student portal that we mentioned today. So we have more vertically specific pieces but as -- there'll be one overarching UI that will be specific to the individual verticals in terms of what they need and what not. But a good piece of encompassing technology that we're -- it's going to take us -- there's -- the first round of this is being implemented throughout the entire Speedpay population and there is Phase 2, Phase 3, there's going to be a fair amount of work. We've been doing exactly the opposite, and we've been building a powerful back-end of the system, and Speedpay has not been working on that piece. That's also a multiyear effort and all of the expenses are modeled into the guidance and whatnot that we gave in terms of -- so the upside of that is that it could change our growth rate once this functionality becomes clear road map to the prospective customers. One of the things you got to think about, Brett, you watch the Uber and you watch the Lyft, you watch these guys. These guys are saying, "Oh gee, how are we going to get past the profitability," and everyone's kind of scratching their head. At 5% to 6% cost of sales, right, really expensive, we think that we sit in the sweet spot, right, in terms of if we can get people depend on your form of payment, if we can get them to a much more efficient cost of sales, as all these different subscription-based guys or guys, in effect, where you've already preset how you're going to pay, they may have to go into models that say, you pay one way, it costs you one thing for Uber, you pay another way, it costs you another thing. We think that this creates a real solution to that, right, for some of these syntax that are coming out that the difference between not having the game plan to profitability and profitability could largely be impacted by what they're currently spending for the cost of sales.

--------------------------------------------------------------------------------

Operator [12]

--------------------------------------------------------------------------------

Your next question comes from the line of David Eller from Wells Fargo.

--------------------------------------------------------------------------------

David Luke Eller, Wells Fargo Securities, LLC, Research Division - Associate Analyst [13]

--------------------------------------------------------------------------------

Could you talk -- start by talking about any financials on the Walletron acquisition? So couple of questions there. Was that a cash acquisition? And then you already had a partnership sitting there. So will there be additional revenue from that? Or will that be netted against anything?

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [14]

--------------------------------------------------------------------------------

Yes. We haven't disclosed what the financials are from Walletron. Walletron came to us as a part of the Speedpay acquisition.

--------------------------------------------------------------------------------

David Luke Eller, Wells Fargo Securities, LLC, Research Division - Associate Analyst [15]

--------------------------------------------------------------------------------

Okay. So that is -- that's included in the price? Or you're saying that's a separate deal?

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [16]

--------------------------------------------------------------------------------

It's going to be included in the ultimate purchase price for Speedpay.

--------------------------------------------------------------------------------

David Luke Eller, Wells Fargo Securities, LLC, Research Division - Associate Analyst [17]

--------------------------------------------------------------------------------

Got it. And then I know historically, you've had a focus kind of on the larger number of smaller billers and Speedpay has had a much larger focus on a smaller set of larger billers. So can you talk about any of your initial conversations with some of the larger clients on the Speedpay side? So any pushback from accounts either on pricing concessions or anything like that? Or whether they plan to stay or go?

--------------------------------------------------------------------------------

Philip George Heasley, ACI Worldwide, Inc. - CEO, President & Director [18]

--------------------------------------------------------------------------------

We had one of the preeminent consulting companies operate which is called a white room for us, right, because we're not allowed to interfere with their business until we're closed. But one of contractual agreements we went through was that we wanted to perform very heavy interaction between ourselves and the customer base and whatnot, and the feedback has been positive and has been good. And we are not changing Speedpay's business model. As a matter of fact, we're embracing their model as it relates to significant -- these significant relationships and whatnot. And having said that, we actually believe that there's a backflow value. We have some very, very, very large Bill Pay customers. And we believe that their model is going to be very helpful in terms of us even improving our large customer model. So in effect, we're going to embrace their customer-centric method of dealing with their larger customers. So the answer is, yes, we have been in contact.

--------------------------------------------------------------------------------

David Luke Eller, Wells Fargo Securities, LLC, Research Division - Associate Analyst [19]

--------------------------------------------------------------------------------

Got it. And then talking a little bit about your underlying existing OnDemand business. It's been a time since we've been waiting for -- to see that kind of big step change in the number of wins and volume there. So can you talk about any progress you're seeing in accelerating demand towards maybe that high-single-digit growth range?

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [20]

--------------------------------------------------------------------------------

I think you're starting to see it in the results. Q1 year-over-year growth with 5% margin expansion is 600 basis points. I think what you'll see obviously, starting in Q2 going forward is layering on a significant amount of EBITDA on top of that cost structure. So you're going to see a very different profitability profile going forward. But we expect the OnDemand business to come in probably closer to our higher end of the revenue growth expectations for the year. So we're talking upper single digits on the OnDemand side for the year.

--------------------------------------------------------------------------------

David Luke Eller, Wells Fargo Securities, LLC, Research Division - Associate Analyst [21]

--------------------------------------------------------------------------------

That's great. And then last question for me. Just on the large capital markets deals that have pushed, do you have any additional color there in terms of conversations you've had with those respective parties about continuing service with ACI? And just the level of confidence that you will continue to have that business after close.

--------------------------------------------------------------------------------

Philip George Heasley, ACI Worldwide, Inc. - CEO, President & Director [22]

--------------------------------------------------------------------------------

Well, the only way I can answer that is that we've had no discussions with any of these customers about discontinuing offer -- things -- and as we went through the wins today, and I cannot discuss any individual accounts but as we go through the wins, you can see that we're clearly increasing business with some of the affected parties.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

(Operator Instructions) Next question comes from the line of Peter Heckmann from Davidson.

--------------------------------------------------------------------------------

Peter James Heckmann, D.A. Davidson & Co., Research Division - Senior VP & Senior Research Analyst [24]

--------------------------------------------------------------------------------

Wanted to just review, if you could, a little bit more detail, some of the major milestones we should be thinking about for the integration of Speedpay as we go over the next 4 quarters. And then as well that $35 million in significant transaction costs, how that may go through the year? I assume a big chunk of that will be in the second quarter but how do you envision it in the back half?

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [25]

--------------------------------------------------------------------------------

Yes. We're going to be operating under TSA in terms of the operations. I don't know necessarily, if there -- I would say there's key -- we obviously have milestones, but I don't think from a market-facing perspective. The point is that we make that transition from Speedpay to us as smoothly as possible. So as it relates to that, we'll be operating under a TSA as we migrate those customers from their data centers to our data centers, and so that's going to take time and it will take the amount of time it takes to not be disruptive to the customer base.

--------------------------------------------------------------------------------

Philip George Heasley, ACI Worldwide, Inc. - CEO, President & Director [26]

--------------------------------------------------------------------------------

Yes. One thing I would add to that is we're not doing any maths conversions. We're moving these customers one by one around their specific needs. It's one of the reasons that we put the energy into the TSA that we did.

--------------------------------------------------------------------------------

Scott W. Behrens, ACI Worldwide, Inc. - Senior EVP, CFO & CAO [27]

--------------------------------------------------------------------------------

Yes. And then in terms of the onetimes, yes, Q2 will be heavy. Obviously, a lot of the professional fees associated with the transaction will hit here in Q2 and then the phasing I think then for the rest should be pretty consistent in Q3 and Q4.

--------------------------------------------------------------------------------

Operator [28]

--------------------------------------------------------------------------------

(Operator Instructions) At this time, there are no further question on queue. Presenters, you may continue.

--------------------------------------------------------------------------------

John Kraft, ACI Worldwide, Inc. - VP,IR & Strategic Analysis [29]

--------------------------------------------------------------------------------

Well, thanks, everybody, for dialing in, and we look forward to catching up in the coming weeks. Have a great day.

--------------------------------------------------------------------------------

Operator [30]

--------------------------------------------------------------------------------

Thank you. And that concludes today's conference. Thank you all for participating. You may now disconnect.