ACIW - Earnings call transcript Q1 2018

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Operator

Good day. My name is Elsa, and I will be your conference operator today. At this time, I would like to welcome everyone to the ACI Worldwide Q1 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. you. Thank Instructions] [Operator Mr. may conference. you begin Kraft, your John

John Kraft

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

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

Philip Heasley

highlight Thanks, the a start by and six four customer financial deeper focus providing for John. Scott of trends global to everyone. Good report one. is comments sharing solutions over and my will morning, lens that in. I’ll pleased traction. P&Ls, the market call next few the I’ll two quarter then I’m into spend strong segments that through minutes ACI customer our in on to wins the XXXX. insight ACI’s turn to review. right Jumping I off

bookings growth banks, new total our backlog The intermediaries, continued increased as hit areas. Our XX-month needs. We high across any-to-any more payment achieved trusted million, $X.X our XX% across segments, each outstanding and new new bookings million, over logos billion. in and solution $XXX or an the merchants of provider bookings first our than or quarter XXX% six with power to at XX all-time represent customer target select XXXX. their real-time, one corporates, four quarter $XX ACI to Organizations the financial

strong, XXXX to cloud-based throughout On momentum overall growth the I’ll our totally Bookings saw versus expect filling investments in million the four now solutions. year P&L, our two renewals X% made Within UP the Demand payment The continued XXX and for pipeline the our particularly our over XXXX. out validating the Merchant improvement is EBITDA our continues million explained move portfolio, and our Solutions were strengthening an ACI ACI UP years UP in our basis we grew P&Ls. Solutions addition, few for Payments to last XXXX. to expanding in our Bill we new Payment and over data shape cybersecurity strong of margin. bookings difference On by Demand with a $XX revenue adjusted point segments we environment core continue In bookings growth centers and $XXX net last grow capabilities.

mid rule XX As to I’ve other mentioned the of on equates rate and On yardstick ACI ACI added Demand as At On show EBITDA revenue targeting high with progress a for growth. margin a Demand maturity, to XX% when to words, achieve past EBITDA that our are or margin business the an revenue together In single-digit calls, better. goal we to is our growth business. XX% for

quarter one were the of Our result many factors. EBITDA improvements margin

inefficient in last managing We’re stages out revenues. the of

been In improving availability, data rewarded capacity and improved customer a by requirements, our experience. nonfunctional addition, completion center has included the revenue such as an integration on security, core of and scalability, growth positive multi-year focus

While work XXXX there revenue our date to affirms to projections. of is margin targets, and our still to be plenty done progress attain XXXX,

for program, On to renewals. powerful ACI the in side, adoption technology. On customers Retail bridges value our RPS, uplift renewing Premise continue UP the drive renewals to to within XX% rate or XXX% total customers RPS our UP continues Solution for we our contract which XX% P&L, Payments

R&D now a now is switching to cost initiatives. on real-time into will capabilities transaction of settlement, our UP Payments delivered support UP mind, to – our merchants massive monitoring that have in UP this five offering. on needs in and customers portfolios same and support our hardware available suite for of the the support reduces SWIFT by of savings With Through needs and the renewal we fraud scalability within UPI’s that’s R&D Merchant projects messaging this in our now payment Solution are meet six transactions similar We’re turn Real-Time real-time begin with the cloud. announced UP required with single This Retail India. growth four. quarter initiative in UnionPay multi-tenant UP Linux. UP Based Linux taking and versus to launched address Payments their underlying on a and quarter approach RTPS transactions, I’ll UBI per organizations a year delivery processing Payments to Solution channel International’s the and the lower-cost, we universal XX% decade-long solutions. the Payments with XX% through allows now Pilot host XXXX. modern that commercial a to open building for we with strategy In Merchant database QX, architecture, customer-centric delivery future. offers a we middleware in announced one, on Also, gross SQL, running option. build,

four Banker, quarter upgrades customer kicked our multi-tenant Following quarter cloud-based, release, two digital Universal and new one one. Online off the we customer project the banking solution, in

Early to to want I Our and initiative. our Titanium, than banks has pipeline continuous deployment transform fraud and faster XX% rate next-generation the doubled UOB positives. also our analytics higher performance, in one, we These their are to for customers. as analytics our streaming strategies. are driving more digital lower false spotlight of ACI intelligence engine acceptance advancements numerous payment in of completed evaluating advancements quarter all engagement

are payment payments ways win any the payment I with connections provider. to payment that and providers and endpoints and commitment believe deploy the with unparalleled. this to marketplace. ACI endpoints to and continue more the in area most other makes world fast, capabilities services will payment, than also ACI’s We actively supporting secure pay around any more our uniquely new capabilities by connecting to possibility simple every develop possible

receive Innovation and the continue Strategy Competitive in XXXX In Award systems & with market. to Leadership Solutions UP Frost the industry presented payment one, European quarter ACI accolades. Our Sullivan

addition, Year payment ACI’s UP one France-based enhance. of selected the the and in awards a I’ll service wins by nexo ACI With one. the ID, will largest Merchant companies ACI payments we’re the provide with key proprietary away online transportation some the ACI’s Innovation contract solution. contracts the more the In of globe centralized another span Solutions, our will be Monthly agency of providers key standard to Firm These to examples that Solution in Merchant and this for transportation. opportunities industry four one our win. to and factor and awarded travel significant a Payments and across largest Year. quarter of two received of In Payment travel system our this world’s segment now as Ecosystem signed European significant Finance Best is transportation services. We I Security segments. was omni-channel we to seeing Fraud payment support Merchant maintain the of a fraud to railway expensive share UP was the payment move Antifraud provide able core a representative signed customer with platform. the begin world’s of payment win, in eCommerce protection fraud with strategic named from

every million of of ATF, simplify a and touch that process deal photo toll also traffic transactions ACI solutions points. signed a transportation year. violations provider leading than a enforced processes complex national We will with XX multi-payment smart more

traction We retailers e-commerce segments, merchant also subsections in gained other and – including restaurants.

flexibility to leading One sports provide its ACI selected a world’s payments of layer eCommerce the retailers, global of UP one our solution. through customer and as already integrated solution Payment choice

its with restaurant addition, one In ACI. relationship of expanded world’s the brands top

Our brand encryption tokenization security selected transactions. Payments was with UP for to provide this and and Solution card-present card-not-present Merchant through global data point-to-point

signed strategic ACI’s cards. leading grow financial China-based cardholder footprint global it’s more contract X network endpoints. with our intermediary card segments, UnionPay payment by International of Turning tourist bank set UnionPay with bank, cardholders a a to connect the is than enabling now worldwide base billion of extensive world’s we to significantly and company Chinese to to largest International,

Eastern of and Real-Time in API contract Already Central now Payments digital and Bank and open banking will service using We power OTP also to Management, one signed initiative. independent providers a Payments Group, its UP largest Payments Risk implement manager with transformation capabilities the UP UP OTP Retail Europe. financial ACI’s

UK UK Faster for signed instant Payments payments momentum a with was also Retail UP gateway in bank’s create platform global building also as as contract major ACI selected bank. well to a We Payments, payment Asia. update initiative. payment instant is its for Real-time the

business In transform Payment These ACI was loans. within including selected on retail by customer order companies to than organizations country cashless the bill one. the for leveraging well U.S. segment, in in several more large one large experience that their in mortgage to payment provider PayNet consumer with to and of with one solution society. ensure RPS transform one four real-time and is momentum gateway a a PCI Malaysia’s customer signing across XXXX start is to strong platform, also six segment, its build in a service in quarter is payments presentation off connector we the options, of This Nordics. ACI’s our and summary, areas renewal customized customer its to payment a additional two the compliance. to four P&Ls, contracts bank wide highlight segments. started payment two the organizations, insurance consumer XXX,XXX to Bill Following RPS UP I’ll banks services range provide with significant Corporate chose advanced selection that journey become In largest a quarter ACI

infrastructure position targets to particularly payments fast-evolving with me Our a sage R&D in journey investment nothing That electronic bookings. of bookings, is industry. full-year excellent had us worthwhile achieve places once easy. that told rewarded strong in in the our been A new guidance

through we be years, years. on easy. the his to of financial the face to the pass During it that commentary. baton that, few good to nothing in as coming Portion worthwhile quote, provide the will last stared portion I’ll Scott the cash With certainly of in

Scott Behrens

then good key morning, XXX, Slide prepared We’ll will and a results be update the and the quarter for GAAP results everyone. both today, effective outlook revenue discussing as on new we retrospective comments our And comments disclosed, I’ll financial the our all the of highlights X, the starting ASC Phil, an XXXX. go And a on just replaces my first first ASC January the new through which And for from standard, we’ve for plan provide and for with quarter. on XXXX. old on line present the be approach I’ll reminder, questions. constant open key X adopted modified recognition all previously my our adopted basis and as XXX. Thanks, I of takeaways then to basis.

renewal. On the due On Premise X% booked of we us. our year, to our quarter, XXXX Premise by year ever of in on QX growth. for size a what new overall, which to new had backlog capacity These revenue the year and of So and in actually to the in a $XXX the highest with our more over those our and and the was compared range The On strong growing fees last drove which Premise EBITDA our business in seeing backlog guidance lower last the the timing above million, first QX quarter revenue was compared solid million QX high-margin On first in result last bookings. the QX in We timing of QX Demand from our license quarter in quarter lower is to was in business. was we of year strong XXXX. business than renewal is we in a events Total start was as bookings $XXX XX-month that offset get with business bookings both decline provided XX-month prior increase notable double

follow We of pattern of a expect XXXX events. to more phasing quarterly historic renewal

a Our On points, net and over EBITDA in of compared growth revenue delivered the increasing EBITDA basis by both growth XXX combination strong lower same Demand in expenses period with margins business driven XXXX. to

at with $XXX down the business. very on ended be of from in million, to opportunities and $XX up future about XXXX. cash $X first end the Demand On of million end our debt balance quarter of $XX continue the We a XXXX, optimistic hand, million in We from million margin improvement

a capacity from $XX Our flow down have and from size share renewal of note, the QX we Global Ratings time and BB-. corporate free same and events to again, adjusted of S&P compared in Also quarter million, operating for the XXXX. a the million BB rating cash the timing due our QX quarter, it’s million And us in XXXX, $XX was $XXX to primarily buyback raised credit a authorization. during remaining from on on lastly,

our with are guidance. outlook. bookings, X we our With our reiterating the full-year to particular, next and in to our year full-year Turning Slide solid strong start our

quarter. expect excludes accounting we $X.XX starting $XXX in bookings, continue expect low our in second which to $X.XXX and we continue excuse And to Adjusted range generate our $X.XX $X accounting in be represents billion, is a to accounting EBITDA range grow million ASC of impacted of revenue approximately million a these also the a in not expect guidance expect a to revenue reminder, accounting range to as expect full-year our the to flow growth XXX, So and X% in digits under $XXX – XXX, me, XXXX, million between for which of cash quarter. And second $XXX under to to $XXX to to XXXX. we transaction-related we $XXX and million over to the between in $X.XXX generate the the be expected new guidance. changes and million, billion in new to new do And continue is of to million million with which range $XXX billion a million new historical X% by the not XXXX EBITDA to be free be in expenses. the impact revenue double $XXX we revenue Under in significant to standard, billion, ASC adjusted of of $XXX million.

my at to prepared of flow million we full-year. to in the are questions the for concludes cash open time. expect line be $XXX Operator, free continue That this million to a We remarks. our for to range ready $XXX

Operator

[Operator from comes line first question your Brett you. Stephens Thank of And Instructions] from the Huff Inc.

Blake Anderson

of the got Nice Thanks the for really Hi, net Brett. bookings this much was catching quarter my to taking new out that that acceleration, is fourth question. how strong from that Blake for How growth, versus XQ? maybe just on bookings growth. the much a see pushed of just up

Scott Behrens

should I think, strong. year, had I off mean, we fourth Well, necessarily quarter new our bookings the deals said I out should lost obviously, shows QX what obviously, think call, started we’ve and the just slipped not what is into earnings between be They wouldn’t were that at XXXX. had split be the what But at it deals I in in lost. XXXX time. were

have last us. it this I the of would we it’s throw Obviously, convert year. is, of And this a record part year us so, starting off able quarter off as being early we of year. prepared of I doesn’t track last to they that But end my regardless year, from think point first strong said those stuff, remarks, in signed some at bookings would wish revenue of whether been for or to the have signed

Philip Heasley

prepared that a that last had The we new fact of hiatus in offerings a at of and was signings. it had way that very But bit the said the very had we of the that, Linux we with really was said a – best what the – probably question. in coming strong we what and our the that’s the And GAs quarter terms pleased end whatnot, answering surprise comments, of we’re – doesn’t we we had me a pipeline. was year, the in the a growth our there

Blake Anderson

had we UP-driven? And that the quarter, BASEXX Great. net the big – deal bookings just of overall you that And see much a come yet. on noted but – then not and much the you into really UP are XQ new UP-driven? how BASEXX bookings, those last because Is that of signed, were then strong did did how bank bookings asking, you

Scott Behrens

we I had wouldn’t I – strong bookings. think,

growth of went had through We other of across each we solutions. bookings six bookings said the his that solutions. bookings our I our large script, in Phil had wouldn’t of really all all strong But across had a it UP to I broad-based the disproportionate our quarter. was we the categories. solutions. mean, new UP in really say As renewal And

Blake Anderson

the Great. Thanks for time.

Operator

comes from of And the question from Peter line Heckmann your Davidson. next

Peter Heckmann

you merchants wider think, or transportation I It large is seems category either or from of – main a TAM there? like about company. the And ago? logistics in deal been couple with with, your about expand of morning. this seeing Can good what Hey, thinking that talk the merchants range a you’re potential drivers you might a this a of years had does second

Philip Heasley

Yes.

specialty real Our is electronic payments.

So it, get you if there that the and you be purchase. for paid point things think about are of more can before really becoming more ways to

now companies experience right? kind is we over rattled signing major actually way XX% of of world them the logistics of experience car off going. But basically point I – three their settlement a shows going transportation is the think as you to from one actually a pizza you – will the our the to who what of ordering, the main that’s every the is it, that One in of movie driving good does payment facilitate And their of card. of Transportation, a wants train example quarter. you’re theater at they And players want and a be card-not-present about if lane, or lane real-time one someone your want to if or up experience. you another with

And make of whatever want company partners it’s only they’re not we’ve or what’s that place. whatnot, hands they Game And to need but in our that an their seen purchase, and and a it’s a real-time. called mind are on of experience with off, in actually need they You big terms taking kids off taking real-time immediate terms place. gaming Boy

certainly and awful corporate signings their banks that’s faster towards seeing of the and whatnot coming that traditional drive whatnot. transportation, they they’re tell solution an merchants gaming, trying think I to our We’ll merchant. – real higher-margin that payment their it’s and have be would than and And that the payments and transportation, a pieces about say the it as lot decisions gaming, are to on actually whatnot. food are And or corporates, players hold our between you’re of sometimes whatnot. base sets to would fine. I to six offerings, multi-global really merchants our – differentiate potential world moving restaurants in So thing, hard you where But the and from, as customer

strong seeing growth very we’re So there.

Peter Heckmann

the providers disruptor FinTech on can Okay. little That’s can of you wallets, the you about there digital either maybe new playing maybe and the about bit then, payment some of some helpful. of versus technology a online entrants you’re talk customers And about talk payment the some side, providers, of in-house about those economic how supplying changed think how or outsource? may some how have new your

Philip Heasley

somewhere our of that Well, – is to one to offer gateway And one a of between XXX gateway offerings fastest-growing of who fastest-growing talking and probably I’m a our we’re businesses choices to anybody about wants is X,XXX ability our multitude payments. that bitcoin, us same was approaching as course, laughing, And the someone up with anything of even right? we get was of for. to paid bit we could tiny else. this people and come to allow I kind get little sign because

to don’t probably to are, was in be listening they in business. So but competitors the pretend we we’re that about, business one bigger of our what talking than

you now. out very, business to to give of at touch and but their selling category – we they wants be type ability of able UnionPay growing So But quickly. connectivity accomplish. That’s – right to ability, second-fastest don’t miss to provide that either that’s that very of is satisfy us very different or smaller need we why virtually It’s a them as this endpoints. And the fastest we’re one hundreds International ability it’s what that point, they and the to the whatnot, want payment reach to okay. the the

Peter Heckmann

longer-term a given at the those just about you and And in market Can this talk Great. point or last guidance question multi-year I’ll then in forecast? that had positively EBITDA very But Scott, just ranges I changes any queue. confirm to get thought last back that. responded you quarter.

Scott Behrens

baseline. Yes. that’s Well, we’re on changes. really the has XXXX, there tracking and Obviously, been full-year no the

in a of profitability our ones going think lot in business, in to that drive the part be we’re to growth years. improvements see that AOD are those I to starting those the outer

outlooks. on think, I tracking to executing we’re nicely long-term those So

Peter Heckmann

Great. Thanks. Good to hear.

Operator

line Sutton question line next comes your your And from of Mr. Craig-Hallum. the is from George open/ George,

George Sutton

thank Yes, my say love you. you how name. I

you And any sure includes more relative I make to were Phil, felt So for of that do of this elephant. your you’re pipeline. XXXX, little I to in you I the to is want believe don’t bookings of bit but front get case, strong in seeing you a wanted that what a guidance mentioned sense the

for obviously, So, are growth this bookings significant there some opportunities year?

Philip Heasley

sense the Page we’re past do ones Well, potential really in make on for able we – them quarter, at very and that, of sign our we’re most well. world working if – X honestly, next do news and to mistake four Yes. of thinking the good which we’d said which our deals. sense very, deals that now to can’t. on our point we page. potential the most versus hurt now thinking elephants the these to to options But we’re be for three And But of strategy make – sure elephants those planning. came to We partners, is these large our longer-term – to a not the only that or but are one make no, the dialogues we’re Quite progressing all. of strategic making they could the align time wanted actually made be in

George Sutton

Just to saying capabilities your would implementation you’re be clear, be stretched?

Philip Heasley

right. correct, That’s

George Sutton

seeing zero other that that of Is thing the business. your you’re customers effective… very said that you I found which, Premise RPS, XXX% you’re churn On adopted have think basically part if I in means, interesting about So saying is what one of

Philip Heasley

any said on I conventional that, of what running to this be zero we’ve terms over. is XXX% in And I we’ve said way mean, attrition a attrition, Our would rounding renewals. of RPS think, the many we’re our have times if business.

years X.X still about We have of… haven’t – we

Scott Behrens

Yes.

Philip Heasley

largest years we’ve three customers a Almost our left. of portion got renewed. But have good renewals of

technologies But or And is they’re on both attack figuring and of them we’re what that, terms we use in this so first. transfers, contract. what still opportunity growth, the year getting which equates at for that bridging and continuing continues value basically first new XX% on total right, XXX% they uplift what the to X-year XX% a projects a to both contract says to no, grow they – out those we’re X%

George Sutton

Thanks, That’s it me. right. All for guys.

Operator

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

David Eller

morning, to terms Good and in QX taking you terms it timing you looks this like phasing mentioned hit guidance? renewal a just XXXX midpoint EBITDA, of of it’s of that have Scott, year looks compared historical? EBITDA questions. maybe expected kind the for EBITDA But thanks that’s the of more in historicals. similar probably a phasing terms Could like the your about the proportion to expect your when might you you of earnings to smaller talk either of of or in

Scott Behrens

all the license Yes. renewal business margin. XXX% on the in Really, On I the is the whole Premise timing – there, mean, fee at yes,

on Premise And the impact so EBITDA it’s of XXX% is is that – fees, has XXX% cash. and that license On it an of

year. of following And renewal book the it’s really this so the timing

deals And a second-half so it’s the will that cash phenomenon, the that. too typically quarters that with it so comes – when – renew that – margin and in been when those and later

of renewal just really the book. the timing it’s So

David Eller

Okay.

more much periods? QX year reiterating historical this you at look year, weighted the saying than of guess, to I when and the guidance on not sales of only is, I EBITDA EBITDA back-half your be the what for So will I’m

Scott Behrens

particular, of book, QX. it’s happens and the typically a timing – of mean, where That’s the QX year most most second-half mean, I start has of in again, say renewal would it activity. different the I a it’s second-half. year, of I but in – this lot we seeing every

David Eller

then Could that talk through phase Gotcha. the inefficient what say you in you out? and of what last that ballpark expect the of to when Phil, you’re that the about script – you in or mentioned maybe stages you inning were revenues. And kind – you managing

Philip Heasley

that rid like our Couple and a those up ago, we’re getting books I regulated payday way – subprime, are things through looked innings of like it the, it. we’re getting are of SX we very growth When our virtually in false I and expunging years it, when we no, think – we’re ate entity were that of we of stuff have right? we the we burning weren’t all three call were banks our lenders promises, are, when our regulated late of rid growing. and

Now – to our X% like it X%. maybe it’s it’s But – couple it’s not wasn’t offset still still an before. and a it it’s growth it’s or it a was like – was

So you talk really – very at the this we we’re see it – year, next, Scott, should maybe, to…

Scott Behrens

No, I think….

Philip Heasley

growth growth, think very I have …so revenue on just just – no than the us for – more we we’re EBITDA. at the the these But we I don’t the logic value. have businesses revenue but for we could we’re sane pay – growth integration that, integrated old have we of We’d keeping businesses end produce And of EBITDA. some kept not guess, you’d don’t rather the just revenue fashioned. too know that see

Scott Behrens

Yes.

– from been five is, some portfolios And years. a four, only attrition I’d the thing we’ve to – acquired that we’re it headwind last probably the add our top line we been growth. has think, to I managing yes, so

We’re probably But of our X% yes, line year down revenue terms to to – maybe about a down probably top X% a year. a we’re in still it’s of headwind.

David Eller

Okay. lastly for And then me. Scott,

in near be future? you going could And those provide maybe address whether on you to the color at part hope to bonds Your in expect some I are August. callable

Scott Behrens

announce that nothing this obviously, to we’re mean, and at aware point. we’re our in expires call steps I are. August, premium here the But obviously next exploring what

David Eller

questions. All taking Thank right. you for the

Operator

time. this no at are questions there further And

John Kraft

forward coming weeks. thanks, Well, in. everybody, up catching for dialing the look to in We

Operator

concludes this And conference. today’s

You disconnect. may now

John Kraft	Vice President, Investor Relations and Strategic Analysis
Philip Heasley	President and Executive Officer
Scott Behrens	Senior Executive Vice President and Chief Financial Officer
Blake Anderson	Stephens Inc.
Peter Heckmann	D.A. Davidson Companies
George Sutton	Craig-Hallum Capital Group LLC
David Eller	Wells Fargo Advisors LLC

ACI Worldwide (ACIW) 12 May 182018 Q1 Earnings call transcript