ACIW - Earnings call transcript Q4 2017

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Operator

Good morning. My name is Heidi, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Reports Q4 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. further that follow-up limit for to and you ask question to their We queue if one may and allow have Instructions] you yourselves please one questions, up [Operator again. you questions others time Thank you. your you Kraft, John conference. begin may

John Kraft

Heidi, Today’s like our morning, all Safe Harbor everybody. to is subject both good and and of Thanks, call, events, forward-looking statements.

of available copy full text well the the CEO; our final Phil CFO. pages our on of as of first a Heasley, Behrens, today, is statements the the both find as deck can SEC. on morning��s You website, On our which presentation call Scott and with and this is

Raymond Orlando Innovators Conference take and Phil. we make With will knows FinTech sure James started, on the turn Institutional Craig-Hallum on everybody to Boston the that, ACI all XXth Conference Investor March I want Before it Annual get Xth in to XXth. March -- that in attending I be over

Phil Heasley

growth areas. insight providing approach. comments my I’m to going minutes better validated and business. structure to morning, three organizational this introduced few our the profitability and celebrated and achieved lives. profitability We pleased XXXX internally wins security John, report for several next deeper I’m to pivotal pivotal goals, a our strategic two and revenue P&L that our XXXX customer manage We will and the on also on ACI of good the reorganized of It numerous goal levels. Thanks, the the year have XXXX best into for new and results year focus everyone. was company. spend was

become in leader our First, software. global undisputed I’ll the in share ongoing journey payment progress to the

I’ll it’s beyond. P&L new for the will and deeper opportunities XXXX highlight plans. fundamental third, key go And and why Second, our P&L, in wins and our go forward XXXX to I two into structure

core meets build portfolio non-rival our First, of end-to-end XX merchants worked to part that intermediaries, for of the financial any our payment segments, to corporations. ACI better any real custom years banks, the needs has customer -- journey, and time software the core

providing a building While earnings on on In time back in call, plans long-term my executes XX unusual maybe case years is showing a as horizon. an how always and rewarded in view, I look the values ACI was XXXX. over believe of

and divestiture, built increasing infrastructure, We in tasks, U.S. the were the loan process sincerely investing closed our meet we’ve heavily and and state-of-the-art asset managed companies service were of impacted have inherited taxed in as and via These our down as acquired significant support core delivery, more cloud patient wind integrated and XXXX, out ACI sales, Europe, staff in for for customers centers locations, X than and well our the nine revenue. smaller projects which cybersecurity we this of non-core and data their which four since thank people To acquisition. migrated our during customers and XX I most demand very journey.

efforts we XXXX, we As several entered these rewarded. saw of

next-generation Retail UP We in UP systems was In quarter produced contract last technology. renewals. backlog. the customers rate and existing The UP of total XX% a were driving XX% transaction UP our activate year XX-month our UP that to which projects RPS, XX directly fifth uplift to for the XXX% our We powerful the foremost the enables XXXX, to customers last revenue components and of a continue year’s strategy related and these of validated. migrate to Solution Payment initiated the adoption RPS value own renewals. to to First for strategy investment their at customer program volumes lever saw bridges their pace. ACI’s RPS solutions

Linux our of to Solutions one Running technology with Continuing run increase these the our to last UP our two ago. through our years progress numbers the four our steadily enables the cycle. we journey, port been six renewal middleware Payments initiatives has solutions several customers Across years portfolio, strategic to investments. expect our theme Linux. starting over save as now We Retail of on on XX% Linux, UP with on hardware to and XX% of

Linux worth slowed customers. year-end solution While improvements pipeline they for have These bookings releases during our year, ‘XX. may the some wait the for were increased the

solution. Another This of won awards expect Online the bookings strong has next-generation Universal already digital multitenant milestone cloud-based our of journey ACI’s several and enhanced follow. was delivery we in Banker, offering to banking

present We improving offerings. also implementation slowdown not card they’re encompasses new risk bookings, which times. our continued developing XXXX may omni-channel, management, UP offering to and releases but have present adding platform, These card Payments pipeline and significantly Merchant our also

new On like and margins the XX% year, operations Moving fine we On two within six-year our we solutions re-enhanced in grew where and discuss to is on delivery for manage operated solutions, and acquiring software that second capabilities. global more and customer’s the the sales I’d and Premise us Throughout topic, P&L building new models. term now to ACI our teams total premise Premise P&L, tune and a our Revenue and X% revenue. also profit is our related Demand a restructured structure the my in P&Ls, XXXX. represents mature out On to rolled This for customers to costs structure cloud operating allows better

of recreating our represents from grow cloud, prefer RPS XX% and solution, to This many payment given ACI’s years up Within our P&L, RTPS. On total we’re ACI’s value ACI real-time particularly While five On which grew revenue. business and revenue Premise utilizing with continues ago. cloud our business, Demand is now the customers XX% also X%

On our profit In XXs to ACI’s that margin growth ago, focus opportunity XX% acquisition XX% key integration impacted can with On Rule At it’s On in on to I outside equate revenue margin achieving Demand we added XX% in the operate, the margin Demand all and Analyst effectively in most to negative recent better. EBITDA Day, completed. drivers to pure minutes segment a acquire, the and ACI On ACI’s ACI’s recent when That generated a consolidations together margin optimize Rule to and X% the up Excluding XX. This data margin our the With we XXXX. business. other the from rate EBITDA model, of of that or to was On discussed our the three discussed growth. goal we segment words, build, the of additional our generated thus clearly the Premise box revenue three-tier said, of manage Demand related by corporate journey margin, the Demand overhead, investments to segment. now its have center few EBITDA provides

the late the complete. major XXXX On product investments margin deliver side, to update in are

fixed data the cost center many future cost are of service, centers environment extensive step largely can absorb to storage and structure Further, finished, investments cybersecurity of Our the these function and years Linux transaction communications. reduces volume data build-out and our growth.

margin including will show Linux. the and over at We efforts payments block cutting to of next chain the few significant in improvements technology, years edge continuing while stay

is We have reach. Rule work the a much goal lot of to very and of our within do XX

RPS significant across segments, some our increases representative involved of we’re quarter customer customer total and second corporations, me Lastly, both contract are These financial of signed North and our our payment the seeing renewals. intermediary largest now banks, in discuss strategic In value. opportunities more examples contracts core in largest America, signed let four notable all four. merchants intermediaries, customer and financial bank

significant several of signed an with large significant means the these for management with new payments our RPS were modules. to domestic all a power Asia, selected our Bill renewals provides as program we providing customers. customer five financial three North added based Also well incremental that Latin person-to-person Payment and solutions. banks also two including domestic significant transaction to company. one business, a intermediary with contract existing and top customer RPS e-commerce contracts. RPS, net and the customers, customers wins ACI longstanding the two With notable renewed and all specialty signed another RPS In intermediary that new contract validation large finance powerful largest American the bank renewals added customer a renewal as the value largest of in domestic notable contract financial include Well anti-fraud America, ever it and payments. and value value also an our and quarter four signed key renewed In anti-fraud data secure Other have real-time

this will real-time bank use a will payment Clearing Specifically, The which hub, large ACI’s strategic to include technology network. payment as House’s access

real-time payments the schemes, new global our in solutions interest momentum Given is payment high. mandating regulations real-time and

the our fast desire and the constant opportunity. investments Leveraging to start XXXX. several XXXX. well already provide keep high Our this revenue with generated off years payment Asia. with share system of through of selected already count bookings contract basically platform world’s a largest one payment subsidiary in to Immediate quarter growing we’ve largest UnionPay, quarter payment closing, a way we month, on to our acceleration and merchants. momentum, have XXXX we’re world’s this Bank, we major uniquely deleverage bank at for new be real-time last in Half celebrated the In of in summary, the year XXXX. we believe in a growth breakout to In of one signed one this QX, ACI fastest Solutions live over largest immediate did the Payment officially UP capitalize we rewarded. in international underway Asia, we the In our a positioned was as of type China will the Southeast And Europe, been all one providers. and same DBS In go

and value period of to entering improvement, XXXX XX cash will have we today flow flow Financially years position accelerate -- We prove in profitability timeframe. cash and a will to number XXXX growth. strong as virtually provide is ago. of ACI same be key margin of drivers and the shares the did EBITDA outstanding and

our flow the and on plan ability We pass to our his him EBITDA EBITDA are details will our strong continue XXXX. now year for and and that, for to I’ll outlook beyond, and cash shareholder guidance give this XXXX baton for With for about comments. Scott financial value. XXXX, and drive excited XXXX to

Scott Behrens

XXXX, first for longer Thanks, morning, with six guidance range for key to my everyone. I our go in from Phil, questions. then as then for XXXX. year. line open EBITDA through starting be provide plan the takeaways well slide and comments on outlook and as good results XXXX I’ll the XXXX for We’ll and our

$XXX bookings new were million year were and billion. $X.X bookings full total Our

last delayed did year. said, strong lot we bookings of achieving as second ever have QX and to signings quarter highest While we growth And early Bill over quarterly XXXX. strong only customers some show the we expect XXXX, second with quarter to done in our XXXX bookings number, during our saw the started get a first QX

over points grew margin was backlog foreign up million year’s, growth growth scale made On range a infrastructure XX-month capability and EBITDA and XXX year. and starting the billion while our looking products generation exceeded $X.XXX backlog in and a net growth, revenue currency margin we’re as million. negative ended total In our saw Demand represents of We revenue. of down this $XX at Full business operating XX% end cash free CapEx exit is at On X% year at represents Premise the adjusting year last our up EBITDA From at segment growth X% year to from both margin flow excluding balance over million years. which revenue new basis platform XXXX, we’re provided XX% This our stands roughly last year and which million, after XX% our represents the revenue, we the a of in for the high we’ve debt for the P&Ls, million, overhead, XX%, X% $X.X and revenue of Our XX-month cash up was over divestiture. XXXX business year and years. up guidance XX% last million and beginning adjusting guidance activities $XXX and ACI’s from EBITDA the investments the to and and segment perspective five This $XXX the the was that up the $XX now had at see flow, and two lowest was was year last strong corporate recent for On to year past for strong ACI’s and XX% as Premise cash EBITDA a was year. our of with generated was cash flow X% year we’ve of leverage contributed and range. total generated in grew for billion X% we $XXX $XX margin the SaaS after XXXX operating our heavy CFS from ratio

we million today we part to shares the or of in million. stock our of repurchased XXXX, early and ACI announced repurchase and $XX authorization here QX reloaded that During share million, $XXX roughly X have

let Turning a by impacted next accounting has few ACI take tax to slide moments and how changes. me seven, the discuss to recent

First, took in tax Jobs the regarding Cuts net QX our corporate and assets, the given the U.S. Tax of revaluation In the and ACI rate. Act. deferred U.S. charge, non-cash reduction a XXXX, tax write-down

In earnings. addition, on reported to tax charge we the foreign new for unremitted

to foreign with in GAAP to Therefore, in a rate the XXXX tax expect roughly effective we expect of the any offset tax free We we and which act. obligation. cash of credits an operate. line do flow expect any closer tax as as available XX% jurisdictions impact rate we U.S. utilize falls rate foreign the cash tax XXXX, the In result not to

will NOLs we our $XXX remain. Our as we million utilize acquired which to for low cash continue remain taxes have U.S.

the Moving standard XXXX, which ASC ASC to accounting XXX, revenue XXX. replaces rules, next new effective adopted new recognition the January we X,

the approach old changes and will on specific areas. bulk retrospective key basis for and XXXX. the modified present disclosed, financial The we have new previously these two results As our of impact will both adopted

to First, it’s recognized and our paid fees time. paid yearly Premise yearly rather relates basis or a will over monthly monthly be revenue, now it all on as license upfront than On

phasing revenue be the not as year. are half will the weighted impacted signed, The in it of our this impact recognize of we’ll towards our amount While all also obviously quarter flows, and quarterly will license fees recognized. is impact the cash the will deal second timing heavily which

required we’ll commissions side, have be recognize ratably cost to done expense sales we the On previously. upfront versus now as

flow results new continue they those revenues SaaS will We impact basis. bookings platform flows an and report as cash we financial the past, and or to see generally and both new for will as Demand the on not to rules will have and XXXX, old see our for cash under ratable On we’ll any impact in and the key be our not again, speaking metrics segment our

well, results our XXXX under guidance, and with starting to the our accounting actual addition our with we’ll Turning guidance next XXX. as eight, GAAP, slide in both to both guidance or also historical under provide old reporting forward new under ASC

to $XXX expect range $XXX expected $X.XXX slide XXXX you’ll to Adjusted billion, for bookings full for year For million first to of be in of low-double find a X% to million we the be new is in represents between XXXX digits EBITDA we to generate between to but million $XXX expect between the $X.XXX $X.XX in excludes range first XXX. a XXXX million your ASC Under full in bookings. above nine, million on to transaction-related additional the X% new expect quarter year our to of XXXX, anomaly and XXXX, generate of with range billion we billion trend over in And compensate to revenue and $X XXX. which in standards, to grow in $XXX million, to expect guidance we significant line, saw in which help growth approximately revenue XXXX. And to we to expense which million expect of adjusted $XXX modeling, the to $XXX ASC $XXX the and be assumptions are and the under billion under revenue million. the expected EBITDA a is and accounting $X in million million we revenue $XXX $X.XX quarter be

range million. years. the interest continuing compensation should diluted million, trend are targets page and approximately and activity. lastly, $XX $XXX Capital million. share to We to cash to expenditures approximate EBITDA a and excludes of expected finally, is cash interest downward in to million providing future outlook share buyback XX, of $XXX expense the million for couple $XX turning Pass-through approximate non-cash and taxes we’re interchange of million, any our of should expected last $XX expect And you approximate should approximate to XXXX. of $XXX $XX $XX GAAP count beyond amortization adjusted million, million, million Depreciation long our $XXX be which range

model XXXX as up We to to million. growth million in business $XXX trend that range beginning the scale, expect targeting our by drive $XXX well million XXs leverage be to to $XXX be as are and are expansion. to platform in to show EBITDA a beyond the for in EBITDA focus and that’s range continuing our a SaaS in We of and both EBITDA on the in on continue driven our business Rule of million see XXXX $XXX XXXX of to

we used at continue high That of growth resulting to guidance, flow strong years. down that So, revenue excess in five leverage and EBITDA pay in resulting end in generated lowest of strong ratio the guidance. in summary, cash in our our EBITDA our debt, was part generation

also X growth are share well-positioned We beyond. believe in and well-positioned of our are reloaded XXXX And and we shares for strong repurchase our we and with XXX million stock million purchased finally, flow cash EBITDA authorization. generation

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

Operator

Thank go Sutton George the with line Please your comes you. of ahead. question And Craig-Hallum. [Operator first from Instructions]

Jason Kreyer

Hey It’s Jason gentlemen. Good on George. morning. for

Phil Heasley

Hi, Jason.

Jason Kreyer

where the prepared your know you your And ever. some that So you’d bookings you you on just pipeline? bookings that through see ran I you’ve said specifics mentioned remarks, what give are some pipeline know in of the if script, but wondering drivers is in composition. can that than larger you things

Phil Heasley

one, -- on to could to trend question. have the impacted The Well, our to a get that. to a to back time have announced line that get our the should We and to in actually at gap in are only -- and driving and fact major to we a was was working going all our strategically doubled renewals, year do I deliberately ‘XX two on objective bit was that and a bridging of back we’re bookings because way -- the renewals by little the yeah, closed on be we number and everyone new answer that it and program in task ‘XX that strong instead this I on answer one. that as ACI renewals down said renewals, did told in four the last that technology RPS to years year things we working one-year that number on of is you fact largely a itself. had they renewals the of into

in to itself slowed even We bookings, XXX% amount there the -- close that we’re we’d cut shut shut half basically in our though of fact running down -- because we pipe it renewals our of against. were we So, and renewals renewal.

that were came Second new coming it not we’re we -- trying and digital clear one made offerings. we GAs were was of and all down analyst that with to that slowed we that -- our Linux GAs. and that to the competitors because from that in We on marketplace we the the wanted our did had we and Linux values the we other without signal market out the XXXX very did of two the since what significant to have out meetings the offering platform on efforts

slowed So also. bookings that our down

salesforce. salesforce the underestimated to into three which area reorganized The structure. is P&L be went from shouldn’t We third two one we

way when lines, we in separated why significant technology optimum and directly that’s --that optimal then too we year’s underestimate try coming no the to because we in went dependent the to so through development. and so is than reason too a closing wouldn’t from the and game -- making sales, from not. we we to Now out my changing There’s our I trying quarter, renewals -- I from and the way separated quarter already way have in both our UP we you with to we’re are of that quarter deals stick a we what a -- into cross-sell interest and in analogy and were revenue opinion, and we And fourth the and to not organized confront we that’s weren’t those right, last was we’re use we that. on the hockey less we’re the had one score did point, did business on last level first the be fourth quarter at year the satisfied first a Olympic

right -- was to quarter was the right on for -- pieces so forward four like don’t move. right of or technology two a The the just mad the bookings more had spread the those to do morning. itself been this quarters new winning for reasons year that have reasons validating of was where the pipeline. right in We think go wait it with wire We’ve down the those other -- I’d basis, that than on business get if nothing is so why in approved RPS crossed reorganization and whatsoever And contracts. to We one -- to dash R&D or you slow signing the all really and move. rare the a our the just focus awards budgets fact And all move. as think We the business the everyone’s move. fourth reasons three being the

Jason Kreyer

on that. Thank you. color Great

the past. me to something Just we’ve one that’s seen in and more you decision XXXX long-term from guidance question XXXX, for the for the not provide guys

confidence So appear me pipeline the in just on going but chose that’s provide guidance? would thoughts level more of you from that forward, why give coming to it your

Phil Heasley

supports think, -- said, everything everything, it I Well, we right. it doesn’t

going not I’m bunch what to reiterate we of So a said.

of of right. time X% cash we into can’t out per that than to EBITDA stock share terms more do huge look to in overly share, another is another X% want real discounted attractive just per -- earnings I we disciplined it of the put stock. our anything it. or of hard -- about own or very there share. we’re get think buy that back being a and finding per our authority Think We back that. don’t we’re a We how going to think having a I we that after our flow way that at and when bought terms And says whatever lawsuit EBITDA that’s we’re we way in buy

Scott Behrens

providing about time and add Yeah. at we It and I’d this time a now natural the I we’ve two talking the last progression is On that think, of platform for SaaS met is, Jason, last the Rule our the points, about the Day, getting the probably for Rule what And year can only of of introduced of XXX was segments move our this basis basis P&L out than When a and of we our points. the other traction thing going we on we business. years, XXX I about been about year. to to but the Premise -- in November Analyst XX, in essentially XXs quicker talked there we’re higher get commitments Rule business little cloud that needle the targets said of have to that XX. growth we course five EBITDA at the over

profitability reason put ability XXs of where the particular to was out of think XXXX get And on it and we in the some kind for a drive business. of there so the our it direction cloud part execute to and that’s to will of our how XXXX Rule to

Phil Heasley

to have with see the have that you cash. company the the options is generating we that be have all and -- clear holistic for And to we cash we be

Jason Kreyer

lot Thanks guys. Great. a

Operator

of comes Peter Heckmann with line Davidson. next from ahead. question the Please your And go

Peter Heckmann

Thanks for Hey. providing that Good term morning, longer guidance. everyone.

revenue welcome. contemplated at about numbers, those be move, think help we us bold I lower ends But the and a something of that’s that guidance bit can ranges? what you of the a as towards EBITDA little market try it’s might term those thinking higher will type growth and model longer

Scott Behrens

to -- for We guided mid-to-upper single talking XXXX, said Yeah. the five digits. years to growth. Well, X% we’ve obviously over we’re that X% revenue for certainly

growth. mid-to-upper I ‘XX you’ll towards XXXX and So in revenue baseline single-digit a is that what think ‘XX the see progression, is

Peter Heckmann

Okay. And…

Scott Behrens

to it of to -- efficiency is is deliver other really, our guess, I growth, be dynamics the there’s our two is the One business. But EBITDA optimization be but ability I cloud the going but on to, going revenue targets. those and to

So, well three-year and investment we’re again, as product going we put so dividends costs in we’re going infrastructure at set. past to period the in see that -- as or to that a into development, now into be lot the able of we’re the

it revenue optimization and combination those targets. really of as on a I that So cost help both see the will growth on us delivering

Peter Heckmann

Okay.

Okay. get And of XXXX minimum if mean, that need in you there of to those much you a bookings XXXX we is have bookings say level numbers, let’s a flat achieve comp, then to in to I guys. will easy on year relatively how XXXX that a effect

Phil Heasley

little replenished tiny ‘XX XX-month -- and grew was the when you bit. it leap from still Well, even so we year, a forward a going we a backlog standpoint, still backlog -- replenished

going On be want three business, very We’ve been away that. backlog start stay The baseline of think growth ours AOD Premise and that you into to to its and than that’s predictable revenue in growth The going before more stocking way. organic and revenue, that is years that, very so the follows bookings would the backlog, of you the revenue response that to business business historic So increased AOD with. for full out, bookings the generation revenue as much revenue. drivers have

to not bookings good AOD going on like feel right very and of idea organic transaction -- that by add beat in forecast terms anybody not to in the a comfortably piece. bigger very are they chair. ‘XX mechanism growth a get and we of disappointing the and much been which possible divide and roll them off and right to that multiyear feel is and two, And trajectory. on be confident ‘XX growth actual expecting be ‘XX yeah, if in we’re trajectory. we we’re two in time growth you fixed floor should should contract. it’s digital versus has transformation real and divided terms another and together payment we be of its And and the by by has So we business that share then floor whole It’s said, ‘XX, the a take comfortable as that as in

Peter Heckmann

I perhaps, then But deployment? term renewals your bookings it understand was didn’t extensions, comment And on renewals in on question, more less piece, focused last Okay. just both the what the was were focused it comment lower. totally on I the the on see the and and upgrade numbers,

Phil Heasley

isn’t the changed this on new No, out with to of of ‘XX old third combining no, go renew And core -- cycle only said their aggressively that new and the new operating that was apologize. you and year of work and no. I when from business we the said and business. I want only on bring we our of the everybody lot we’re said, in traditionally the contracts -- going end We come a year. work and in year. course, to we technology with business in comes of What complexity add-on renewal of effect We RPS current out UP. our fourth

capacity that impacts that So gee, of when make sense? say, additional it I’m well, half only Does purchased. going renewals, not add-on is it that only the renew you, and also to impacts

Peter Heckmann

does. It does. It

So…

Phil Heasley

Yeah.

Peter Heckmann

increase that prior as prior in is still … will period that is in, business an in we been there locked hasn’t quarters cancellations, or just…

Phil Heasley

No.

zero. is attrition rate virtually Our

Peter Heckmann

Yeah.

‘XX? So we come have will in ‘XX we see a those through high-level of confidence, or

Phil Heasley

Yeah.

Peter Heckmann

Thank you. Okay.

Phil Heasley

Yeah.

Operator

ahead. with Please question Brett next of go line Stephens. comes your from the And Huff

Brett Huff

you you question to XQ, Phil, seems One in the big very it’s guys. the us you morning, mentioned closed. it on a that success think, I had deal Good

ultimately I I North think to that bank. your second and you a intermediary, your largest which right? on that my American also think, as financial understanding Is bank said referred you largest

Phil Heasley

have now the both RPS We which five they two world, the that are support across financial have two the and much number and the banks, number are No. intermediaries. customers up-enabled around bank They’re they line we of top financial one up-enabled. as But the very right. intermediaries,

Brett Huff

Okay.

talking why sounds in thought did And the understand our in bank fourth don’t we U.S. the you would been focus here through? contracts have -- big of how I understanding given been that don’t It number that the of quarter that second number confused much flow contracts. better to flow bookings So the why the on number. bookings lift through big how in XX% I you and bookings math specifically has I’m those the just that are on were on backlog wouldn’t doesn’t big like XX% those that understand least or close. at about to lack you our

Phil Heasley

with Well, the number back a do bit to of of yoking renewals. little the has that number,

we combination to for be about Now, We’ve XX% no, a would what The all our we’re But is don’t talk number going and done we definitely is real of, contracts. know, to and did got any, I also achieved volume. XX% it’s almost no there’s XX% you individual upset. that’s we’ve think so look buying basically we’ve not secret. incremental customers

top by XX% you five-year the are over plus because contracts a impact done most what bookings. a we taken to contract, less up that ‘XX, first is, old current XX contract, year. nice rate revenue them slightly By lands the on us it growth a in the of ‘XX quarter had so said that Now that lower fourth X% technology, we’ve gives of slightly think you’re which the actually and on quarter of change. from we’ve get followed, take duration new if I technology -- giving X% But there’s the that, about ILF, going we provided

more it, I more volume on? work start they to they you As into contract then guess them do -- on to in, to bring contract add they or best on adding want they us right. it us way projects themselves the volumes or

Scott Behrens

Brett, deal with which thing looking signed our QX you’re that a ever, is renewal, to well at event, bookings it that term substantial was XXXX, remember we largest event. XXXX as that when the actually QX new the I’d but comparable came add Yeah. substantial to extension only as

we of Phil in about So QX ‘XX. RPS that customers signed those being talks had one was

the fairly So, period. large there is a amount comparable in comp

Brett Huff

Okay. insight. And second for question is Thanks that -- that’s helpful.

for is million double net on the of being in growth and By existing low than single-digit have year. ‘XX bookings million your a to low new in Second lower this my math, still that mid-teens next for math that to you we double-digit would guiding That’s year on for kind down me By to came question you’re million it is and $XXX high even on we’re general $XXX my lower though guided had in ‘XX. had dollars $XXX also been confusing line. next there booking trend year are Where absolute conservative or we kept for go? just does delay base.

Scott Behrens

first goes the in we we’re quarter of seeing to and we for all bookings of a seeing, things, wider terms But we’re it what Phil range well, all, first mean, nearly still probably, of of in -- as are computing. double, I last back what QX. at QX, said, level have Two the year. than low Yeah. you’re maybe

comps strong it to that the makes think different. year that So and early we’re in going here I see

think, this we margin. took slipped, had historically year. deal them from slipped with That the revenue I they case year-to-year, where and they wasn’t

likely have deals deals straight So revenue it would gone would driven in status delivered that likely and for year. were slipped deals gone the have -- would have these backlog each just into projects

in those first now weeks some the lot status most path, point really of fact and a the again would knock at project signing that in future. we’re year, into this backlog off to gone delivered the because So the have of doesn’t -- a that six

Brett Huff

license question license getting had think, through in great that’s lines was much that implied all Phil in What of I expected Scott, we maybe four your think or in. -- driving leverage. longer EBITDA know sort OpEx forward I Okay. And margin OpEx, favorable guys some drove going despite higher we wasn’t really little or that three one Phil, the lines us, than quarter then the on as don’t you done. of The lower a last of success quarter if but but had or than you leverage lower mix stuff of should that one and done -- mentioned, is term not for What COGS mix three and in lot bit you guidance? from renewals particularly that for guys about usual, yet, a

Scott Behrens

think, in again look into coming the achieved of the of we of the it -- did past to natural that or you leverage a high is if yeah, a of also But ends, it’s guidance incremental of the driving bottomline EBITDA. that excess to [ph] Well, relative drop made the amount dollar to those just the lot scale but into bottomline. say not a And deliver lot will at investments only model. (XX:XX) gets in investment revenue we’ve were also that and that think midpoint X% it’s relative I I our

leverage the investments see. and the really it’s of those we start So, to scale

Phil Heasley

we we’ve end you done you’ll you’ll is do you do companies And because SX’s XX Brett, I we also the have to it lot you to whatnot, flag up of is this major has want for -- it it, term, guys what out to our to of other products three a street one the weren’t years core having actually to and online business, not whatnot. buy is that the When offset vision got you’re because we’ve with I to a is build. what real companies to been a a But driven want to revenue one revenue that customers, of to work going trying business building your make with we discontinued What having and explaining up the years, our end that set out and and had you’ll the tests company reason revenue company. we last gross growth and whatnot for through great we divest, amount gross long we’ve out one to -- of by of of end capabilities -- answer and logically is of comments whom weren’t really think. four one-time bad kinds the morning. it’s thing up in those to a put and buy of going having XX lines, job a I put his continue of we’ve you’ve that one but front

out gone we driving we’re closing that don’t. its basis good and building away becomes a those efficiency. no that net it of So to through have you And was one little away, go day out has We four. you’re multiplier much the that’s because revenue that if it cost expenses its to are is margin revenue expect the to went once XX has don’t it’s business beginning growth that margin, marginal data we But growing you a your a so looks rate, other what the revenue and and on went and what of see. like EBITDA, that but effect centers bunch does a then

cost investment in expecting fixed also We’re against that leverage those.

before did have we of centers in have just the We those way years we growth now. to readdress

Brett Huff

drive worse folks what to trying handle that upside And you what last bookings how conservative the double-digit seeing outlook helpful. just and the, because -- downsides are it prior know what don’t and if would questions, I are upsides, I more mid-teens that you me. on now, think, run you of comment. it’s better are to We’ve But low right implied get is is one know that the Thank maybe don’t What That’s comment, your of might want Okay. downside in the mentioned you. for a rate? some was is to range, I kind you a gotten or drive than guys that? kind Scott,

Phil Heasley

I things Well, as CFO I’ll of give give then you of will a Scott our couple let a and couple you things.

the regulatory of didn’t no Banks invest can not two that investing possible regime that and positive. merchants afford probably they whereas have under have eight And in biggest the years what -- it’s the have they’ll are And investing, scheme. We right. of last banks they’ve to has nothing little against they tax recipients regulatory the merchants have invested this been and that more, invest to reductions. been of been really

that forecast great of do and business that transformational XX going part do the kinds been huge a they in after things of a of of as doing lot of way have technology, couple gee, and got projects positive. have going just need forward. do that and us terms regime We deals whatnot, regulatory are to with and saying, to just of we well, is a And In can that’s they that. come customers say that potentially that best I people can years we’ve week our quit the below this

rates but I those our something be there about or forecast on and the growth they in one. dependent that injure, would banks get or can’t -- is we happens are elephant whatnot, when trouble the out initiatives something, negative are that and not side So talk again severely on that really to any well-sized

Scott Behrens

is that, agree The thing to the add macroeconomic. I on Yeah. I’d that would only be it downside something

though, a of upside. upside -- there’s drivers lot the of we’re On

XX% RPS getting the We’re of our we’re where program, XX%, entering uplift. price year the three

that’s -- high, rate. very adoption been and that’s XXX% nearly So

each subject really of the that’s to pool renewals year. we have So

we again, so, in And year introduced three of just time solutions. that, real our payment

the on So new wholesale program. side program. but not RPS similar this that payments, to will -- just first the of the be product more And And that’s very side, the release. the on retail that’s of overall full then, year structured

the solution as really drive new So the will upside. capabilities, the what are well Linux banking as digital

Brett Huff

Okay. Thanks for it. time. your I appreciate

Operator

question Wells And Eller Fargo. ahead. Please from comes go with your the line David of next

David Eller

and if the XX% Scott, on to slides quickly the typically or authorization? could you your you’ve held the bring of related to I Phil, efficiently And, if you how back related any cash call. all and the to for you to give morning. on new $XXX there’s us then some cash XX% million to be offshore wondered start thank Good and that repo, context share able Tax timeline commentary might the Reform

Scott Behrens

efficient we overseas. cash pretty historically Well, the a ability generally get had structure, to meaning back tax from

forward, cash the it’s be already of to that particular flexible now reason. for we’re unremitting more position Obviously, don’t at is is because a going I part necessarily So a trapped being tax. going look in earnings any

for capital working where in operate we countries. So requirement there’s XX still

it’s certainly of comes that when an and it when working tax leaves jurisdictions required we to They the that the be it tax it element not to there’s in overseas then have, country. So capital certain U.S.

kind dynamics. there’s So those of

of efficient $XXX don’t of been because we that million again, we’ve it’s law in cash. terms tax of impact the forward already will stock to it taxed. of our just going is, shares. of our a structure I I thing at call have we’re would of the today certainly only future say flexibility million our purchased days the and is course, we so what So reiterate And I’d what, Phil X itself that essentially in more think seeing million said, use last, and and XX in Yes, very as look the compelling available authorization, XXX

that’s of of use So, I I’d that… timing think, say about as much any as

Phil Heasley

that. to give little I’ll add-on you a

If a take XX shares you backwards to at look we’ve is pattern us, how million purchased shares. and actually this we about a our buy of back our

a might you So, you of best the look that backwards forward could if in and make this interpolation take way answer might terms question. be to the

David Eller

you that net to any you those -- Tax to use can Okay. have million Thank kind what that after those might of $XXX then give us operating you kind for might mentioned that you be of how able of you Reform, going or continue also exhaust you losses use long when you estimate color. And of forward? can

Scott Behrens

the any at that. of no right. that future of -- availability Well, there limit, no of point our lose There’s there’s terms risk earnings in we would this

a more really utilization have of those. on pretty We couple heavy years

Before but that those years get of -- to some got limitations more off XXXX, a of and pretty couple what drop we’ve out heavy utilization.

David Eller

about for And question housekeeping. Okay. last then, me

cash number specific kind year? did a free of for provided a think I think this flow we the a you can in that you’ve that, flow I assumptions us number your you’ve drive given years guidance provide of to and in lot prior free cash but

Scott Behrens

All very similar nine. are we’ve in done slide the on past. components, to I it’s what -- think Same the

$XXX but $XXX you we the again of call If guided check we where which EBITDA, -- is to sanity to if to kind math, reduce you then do million, to with we’ve you range really start it what and million so that the you around $XX in high is being million growth. components interest million million three $XX million, -- be $XX with taxes our of and cash commensurate $XXX should EBITDA range, the growth CapEx and get major of cash

David Eller

you questions. so my taking Okay. for much Thank

Operator

James. Raymond from And line Wayne question with Please comes your final ahead. the Johnson of go

Wayne Johnson

for data helpful. Thank Yes. all Very points. you Hi. these

give the I call, of should and it Just guidance terms in percentage of in and did going a XXXX? about sales beginning missed any you we as part how the think forward marketing in sales case in of research development,

Phil Heasley

not were are mean, our there, our size, spending. reducing I on contemplating out We I times wish three much so going we R&D there’s because right.

commitment. not R&D are We reducing

Wayne Johnson

you of Okay. XXXX the percentage What can map Should sales be guys say operating within take I and of are a we and overlay ‘XX in expenses? to to thinking just we’re ballpark. that terms going out

Scott Behrens

the hearing a you still question. had R&D? talking Are that typically I hard about time

Wayne Johnson

and use expenses that in as so for guideline we if general, to marketing a starting that and on ‘XX percentage of as sales should and or and modeling? just take sales overlay operating point together, Just -- a R&D ‘XX,

Scott Behrens

Yeah.

well, think, two I things.

and I think selling of percentage consistent revenue be I expect with R&D should higher should essentially as with go marketing a XXXX. spend would up, commensurate the booking.

else I commensurate being numbers. equal, go think, should with So just up expense all higher bookings sales

Wayne Johnson

for revenue was I I I’m at appreciate XXXX, recurring recurring the what the but year? that. and the And whole offsite, revenue apologize when look you what was

Scott Behrens

didn’t hear. I sorry. I’m still

Phil Heasley

recurring Recurring ‘XX’s What revenue. revenue? was

Scott Behrens

The recurring revenue?

Wayne Johnson

percent The total? of Yeah.

Phil Heasley

some. XX

Scott Behrens

$XXX We out Yeah. was, so million yeah, $X.XX million, billion, the of $XXX that. so was get it XX%-ish. can It

Phil Heasley

Yeah. It’s really a...

Wayne Johnson

that up time, creep that -- expect so to correct? percentage And and we should over is

Scott Behrens

you saw being growth that’s all platform where X%, at lot business recurring in think, yeah, SaaS will, revenue. I the in up else look think, was a all XXXX, equal. the our -- recurring I Well, It of you

Premise, So net revenue those drive drive generally will or it’s whether we speaking cloud it’s all incremental grow recurring volumes, sell as will those time to we new over On stream.

Wayne Johnson

follow-up that. Thank I Okay. appreciate you. I’ll offline.

Operator

further no the are there And queue. questions in

John Kraft

look up to a everybody forward catching seeing for everybody in. We good day. in Have thanks calling upcoming events. Well, and

Operator

today’s conference call. concludes This

now may You disconnect.

ACI Worldwide (ACIW) 23 Feb 182017 Q4 Earnings call transcript