ACIW - Earnings call transcript Q3 2020

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the ACI third quarter earnings announcement. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I would like to hand the conference over to your speaker today, Mr. of President Vice Kraft, Investor Relations. John go please ahead. Sir,

John Kraft

Today's Thank to of all good both everyone. you morning call, our harbor forward-looking like and and safe statements. events, is subject

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

Before Analyst website. would are I would ACI link turn information I With that, the like to the will be Further it over, Odilon. our registration turn I November available discuss share on hosting Day to strategy. to to a that a like over XX the ACI Virtual Investor new and call of on page

Odilon Almeida

good on you third COVID you everyone. uncertainty impact an quarter Thank aspects a still lives lot remains. earnings of and joining our pandemic conference XXXX morning and call. The of our nearly us had for daily John Thank all has for

prouder couldn't all of the more employees in than be delivering results very challenges. I However, despite X,XXX solid year-to-date our

progress make step new pillar through three a our continue creation strategy, our the executing on This begin crisis, growth remained this we deliver to ACI have Since continuity our strategy. of I the results the M&A. execution is the in to continuous foundation value sets focused we ensuring started, while for of to very During important we services profitable customers. delivering have change and which as new ACI organic

want our improvement expectations. that for to emphasize expectations performance and we high those I strategic have share for efforts. shareholders our Our

of urgency sight a with operating we want line and of with to are achieve. We a to what clear sense

sharing have very of up of from adjusted cost by as XX%, which focused previous detail up versus management we and year-to-date up QX. results through million growth my our further been represented $XXX XX% and is EBITDA margin Year-to-date Let me was year. EBITDA revenue profitability. on This financial comments was some start X% XX% on net

of are report challenging We to margin year. basis improvement this year-to-date XXX in pleased points

New XX% business, the new same XX% bookings up in were XX% Despite On being business bookings purchasing last up software our customers. revenue. our in the These period year. fee to renewals bookings in temporary are year-to-date new Premise On license license and impacting delays decisions not profitable new our business bank from are due Demand in down Premise COVID-related related delays but are by On impacting very

trend this expect to QX. continue We in

remains retention quarter, customer wins Our high, partnership available Mastercard the solution. We We a in some new market capabilities had our in the robust our and go-to-market our provides the expands that today. ACI's team capabilities new product set. complete most and particularly with real-time exciting to real-time launched and a testament of commitment important industry-leading in the set

In signed we U.K., of Red had fraud into all the We built expansionary and company, our telcos and segment, in a prevention on market. gas the base utilities. in customer two largest our companies Russian athletic and global top world into the expand bookings our offering from credit market-leading On e-commerce with our Canada, business, signing strength, adding helping our top Merchant U.K.-based them their relationship capability their our including OTP in deals BCA expanded for offering. saw in in e-commerce segment, provider contracts retail Argentina, apparel Link with electric technology reach and billers and the a top industry and significant mortgage card with in U.S., On Interac the one our Hungary, Barclays Premise in important and over also two Indonesia booking In renewal the strong payments we in Demand all

part store our customer, fuel issuing convenience Travel label solution with of Centers. private a existing open-loop Pilot card program, As secured we growth new and

ever as service increasingly of superior when ways committed best-in-class life. to as our essential are time to payments and customers providing We digital delivering are at solutions a to

our finalized our priorities implementing business urgency. now recently strategy of strategic a these plan. Turning and three-pillar We been to sense with our have into

larger and are emerging payments, on and with We on building sales agile investment an fast-growing a nimble best-in-class real-time markets. global organization process, focusing merchants sophisticated global

ensure value will creation. of sharing details new to strategy consistent company done ACI before. forward that to in than to ACI our drive is step continue we top There M&A out come and to opportunities XXXX. much organic on to XX, more new on We of that work Day our pursue better We shape the growth strategy will execute on November this look moment we the at be Analyst prepare global change

to right in Scott results QX strategy the We on Scott? to company's trends capitalize re-launch solutions, the have portfolio the team, call emerging the diversified discuss greater customers hand digital of to and ACI payments. I now to detail. will in

Scott Behrens

and good to I our the morning and high-level of the year. provide and our quarter results then go the Odilon Thanks commentary through rest first year-to-date some everyone. regarding third plan for outlook for

Year-to-date quarter. then slide will compared to year, bookings up for Total last comments with renewals bookings occurring questions. I my line last open XX% material will starting quarter. on seven the are with the year. takeaways total from QX over grew in key We be some the XX%

metric X%, XX% driven XX% New XX% business. revenue On recurring driven from bookings our total software bookings On nonrecurring to fee up the Year-to-date an Day $XXX On year, new Recurring total QX, a strategy by year. Premise of $X.X go-forward was revenue of represented contribution our our delays be Demand are our up by In Premise up strength backlog discuss XX% plan down lower last year, year, quarter last We was in over QX largely last Year-to-date were came further in up at in segment. at revenue week. revenue QX quarter. our of QX over to important million, last with the in primarily from backlog in COVID-related mainly due down next financial XX-month a which license and both going billion, we from driven revenue business. our XX-month billion $X.X Speedpay. in and X% improve in metric revenues Investor QX this revenue, results to by predictability from our of of the to is last ended

Turning to our segments.

that in relates sales. QX from Our and was year seen On The to new XX% XX% license down in quarter Premise down COVID-XX and have revenue of QX impact primarily revenue this nonrecurring year-to-date. the we the

are meaning that we but existing renewals, are is bank so of know, you new critical, our and losing impacting the customers, mission continue not our As particular products not to revenue for in the we it from expecting trend balance it's our license year. are customers from impacting customer sales,

in and profitability. our Our e-commerce helping maximizing our On the slowing On from and down Demand management merchant offset due XX% with QX contribution revenue was continue margin COVID-related volumes omnichannel we up verticals a our Speedpay. was on cost payments, solution. and biller to higher X% focus Demand solution in revenue our to certain in Year-to-date perspective, banking digital From

On the from While due this XX% to our decline to XX% our increase Demand decreased QX XX% to license margin On margin revenue, QX year. XX% adjusted in continues last from to in Premise the high-margin EBITDA year in

On profitability We our pleased improvements Demand our are business. in very with

$XXX we Turning and as flow have QX our million with of million we quarter, flow strong year. from next from available ended And X, quarter and cash $XXX than XXX% up activities with million liquidity. in liquidity debt operating significant revolver. starting with saw to $XX on cash slide the last more cash QX the in

ratio During of represents net on X.X down $XX is times. reducing the the end leverage of quarter, ratio debt X.X of by our net times plan in targeted be paid current debt year. balance back and We remain we debt billion. $X.X our debt and million to next This to a our focused leverage

Turning next of outlook rest for to our XXXX. the

our rest say won't are so that where guidance for financial As up. previously seeing have the are lining with the we EBITDA both ranges, suspended uncertainties but comfortable we year of around announced, financial given consensus the will year, I full temporarily you give we we COVID-XX,

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

Operator

first the from of line Vafi Joe Canaccord [Operator Genuity. from Instructions] comes line Your

open. is line Your

Pallav Saini

Thank Joe. a And bookings This for additional new offer you you can a on in quarter, is have international I the maybe as in Pallav from are well? And Strong perspective Saini, any most where on follow-up. to business traction? the you. domestic and it the On color Demand seeing speak

Scott Behrens

Yes. And Odilon biller some On in in Demand e-commerce. the is was strength his of from that coming and commentary, cited

e-commerce combination the in On is the of the But outside Asia, we But but is Premise Our wanted a too, continue that's color. smaller as in Speedpay to here the remember, business, And off geographic domestic. are sales see If then acquisition. and the you entirely Europe on our well, I biller look where traction particular. include albeit seeing strength, I business of would some with particular base U.S. ACI our broader we are international. getting U.S. we weakness

Pallav Saini

collaboration, the as Got this Thank the great so? next you. year Mastercard of think it. evolution on partnership. you. seems And it should we or ahead collaboration about look we Thank How maybe to like a

Odilon Almeida

gain countries better go and going seeing Pallav, this Yes. together start to able we are RFPs and quantify the It's start to be collaboration we we precise now, now. hard that. to because to so going are when we we first forth, start be And the that to

now, and it has potential. of very a would say, a that believe it's lot For we I solution robust

Pallav Saini

you. Thank Great.

Operator

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

line is Your open.

Scott Behrens

there. you Brett,

Odilon Almeida

Brett.

Brett Huff

Hi guys.

seems the on the quarter-to-date We of or trying on appreciate those going kind wanted apologize. I those am base I of that buyers? folks larger just as kind to them ask I of and I it they I on of that. have how of maybe time understand about the understand visibility tenor questions, hold. some are update re-ramping any license are purchases? touch the on and any Sorry always. like if to some know But were with mute. to conversations of just the some mood

Odilon Almeida

It's they us, the continue will headwinds better. in see getting clear for and very them for Thanks there some QX. are don't question. We Brett.

that So products renew part the so we logos. delayed existing the is we are have critical, well. again. our are new strong new The to not going coming really that's are renewals, problem services the Renewals mission products about quite logos being and new and pretty are the contracts no talking and and to

some we it's to So being or will being cases. is this RFPs But at least seeing QX. in very hard for it stop. to clear postponed it's that us going in And continue, RFPs when continue canceled, are predict

Brett Huff

about in products down client of the know seemed things the and more gateways places it et emerging markets, a choice I fraud, the the for of sort on, And of one or global insight on a you be then unique twos, more Okay. bit other invest That's a the going That you helpful. the guys talk choice? teaser guys it like are little than you up, was question Day the clients, for that. Can there's global thanks to number cetera. some a fairway. maybe that which be picked Analyst

the us don't on, why I steal your want global but Analyst Day, big give the thoughts Just from focus? to your merchant thunder

Odilon Almeida

Yes. quite we us. pursuing, are The segment for clear it's

that there are we acquire can We plain consumers. where agnostic is we their where control not I really those just great we think merchant probably they come what of for want If that's ones best call solution, have a experience to vanilla a merchants, global like that the a ones. And the to solution sophisticated wants play. solution,

processors, your control again, that you really, we acquirer-agnostic, the want But You where you more come it's when play. of big to I customer, processors if forth. so the the the that's merchant have something experience and sophisticated, think

Brett Huff

the drivers revenue last kind know for where nicely we addressed through quick then just this that's stuff. Yet, high-margin Could above and give of go thought on you license But was the you that? guys of very just the And ones? you came may and And we me Okay. have us profit. pretty you already. in tough, could question the

Odilon Almeida

to the that am part but here. you to Yes, proud touched very Scott, because team really I I will give start want of I the

And this year. that's think during called also it is costs is point. organic. operational the and I you I we Speedpay think some help majority very of got from discipline came but There the acquisition, strong on

far segment with that, XXX even by under-delivering. profitable points most And have margin Our improvement. we basis is of

very team, the to I of proud discipline. very give So, operational of it the Scott. proud will

Scott Behrens

obviously, to the recall, reduction COVID Yes. quickly back in No, to in can just very $XX our $XX control to that Versus would savings at. in business. side can around discipline the implemented in September of as structural cost that's million are I the it, early we the us. another benefit focus that add is cost numbers, million obviously, cost to late it's came look better. and of the we we then we you new continuing area April, in, continuing again, And than reaction March, deal. control customer continued year, Obviously, But revenue implemented more we early call that

we So very with cost happy are our containment efforts. obviously,

Brett Huff

for it That's for guys. Great. me. color the Thanks

Operator

Your next of the line comes Mayank Needham. question from from Tandon

Your is line open.

Kyle Peterson

that the tough in new Mayank. versus quarters some I I or shift either front, Hi. of are bit actually a guys to you of trends any the the just into cancellations? But whether now quantitatively trends are know seeing you have I Or Thanks you we of few is Good guess, business for touch postponements is This for questions. taking now on converting on Peterson, broad-based, there, in COVID, that qualitatively just On morning. that mentioned what have couple guess in into pandemic? our are been business. Premise guys noticed wanted the we I kind little here. Kyle a new quarters on conversations a more the business the like

Odilon Almeida

think I getting is, not better. Kyle, you the Thank it's summary

same investment way. mainly on on they delay. the continues are can that new they it delaying think the things I banks, And decisions

really geographies delaying exceptions around But I around There So is of happening of growth. most that's it what's are think decisions. globe. the the some some

say You we the right, are way. that same with expenses, in thing doing some could

they globe. They delay what and around doing, I delay really they can. that's the think, are banks, the decisions while

of later sooner are once So banks you they have mix. vision that go to to banks the happen or will long-term products the there that like modernization adding of this have are infrastructures, they cloud, because modernization, the you

Would But delayed at the Scott? it's will decisions it's same are you that happen. those not improving being stage. So mean I and month-after-month. agree,

Scott Behrens

Yes.

of only the word hearing not being is to think marketplace been the are are and at the add for mentioned thing projects that as are we modernization-type that that much being are our I projects none delayed think Certainly, would I this you as have point. canceled I in-flight canceled canceled. they

Kyle Peterson

trending, impact did seeing, far payment this got shifted this kind helpful color. What That's from the so trends you in volumes XQ? helpful. just on know color you guys would around guys And specifically tax other a shifting quarter? I of I switched on Okay. year. then deadline how have the volumes guess, in or the color year-to-date and in of tax follow-up are And just be some the seasonality season Any any are of either some around payment

Scott Behrens

IRS Obviously, to are deadline by QX the Yes. particular, in, from we the shift shift QX. impacted in

So We we in shift. it get back saw that volume all didn't QX.

more QX a, with So would of of that's revenue comes But of say lot portion IRS call did. that story miss A a had the from a we all I gross would whatever large interchange. come back. it didn't I on what

the see interchange QX. up will also you in So went

revenue not business. a So impact of lot on net that

have if biller broaden side, think but come I in, They April, had off, back out tax you it, the a leveled dipped bit. the beyond back May. they call volumes have

see side. high We less to volume target continue the seeing e-commerce still volumes volume than on biller side, we some on then the But are our there.

of when bit a I particularly gone volumes say some and verticals. balance, have a it's So biller, certain up

Kyle Peterson

All That's good color. right. Great. guys. Thanks

Operator

comes line Craig-Hallum. George Sutton the question next Your from of from

Your open. line is

George Sutton

U.S. some catalyst down-market? far, difference like mean, of has for kind the what's you that? approaching a bit seems it predominantly guess, can how guess, question. been bit? for adoption so the Thanks institutions. in taking greater go-to-market real-time in payments you about from of I for the larger any I a I adoption a Is my talk are there

Scott Behrens

growth I lot markets I internationally, has real-time. have you if of requirements mandated most over would that the A years, fastest-growing mean that is look regulatory our international. last those real-time segment. Yes. our for growth obviously, been say of at

critical U.S. a if have more selling in add any adoption. But in know, to this to We I had don't we terms you seen real success point, the want to mass haven't Odilon, capabilities. the that? of

Odilon Almeida

Yes.

that force. would market the say And force. leading not fair I you to think be you of think globe, U.S. is following advanced that around about the It's if have. a have markets it more the real-time much more than you are

happen. So the catch there's a will in lot happen. to of United catching And We States that will believe happen. up up

the are Things have project. coming You along. FedNow

the sure, in have You to the globe, if progress it be play. around States of of other it's you yet lagging a to that for lot. services lot of that, a made countries you United have lots compare come a kind But to there's

George Sutton

Got Or I will it. guess, partnership in internationally And you focused? the then, U.S.? actually help that grow predominantly is Mastercard the with

Odilon Almeida

But can is learning going with solution. to are be Mastercard don't know, excited also don't that. market-by-market. those And like about a very wrong, be we mile I very But we skeptical get This Last that me global doing huge, together be like Mastercard You really is mean, items. big payments not that testing can real-time important. we And it's am are forget very excited and it that, huge. start everything something I that. on about is very

it's So all local.

country work and may in so it one So better country forth. other than

and want So it's oversell. going experimenting. and But also to to undersell experiencing be I thing this not don't

is behind it it initiative. time. And a think really are great big I we

George Sutton

you know Prem Great. it an mean, are actively And from deals were Demand that switch I they you the that new something I Or then possible On to is On is delayed. were customers. of they some that deal? pursuing? said

Odilon Almeida

lot that discipline. with of track a We

losses is I tell RFPs. that losses that of wins less not having have we wins, our in more here. And example, we rate can deals, So for up you in are of losing, have rate we or what

if itself. So happen the not we in are more same amount about It's it losing were it's the about expecting the decision to to not happen. project that that delaying time of

George Sutton

Makes guys. for sense. it me. Thanks That's

Operator

[Operator Instructions].

& Peter comes the line of question Davidson next Co.. from from Your D.A. Heckmann

open. is line Your

Alexis Huseby

growth morning on the This guys. in you us Speedpay for Good in is Could I to on quarter? help for Pete. quickly. touch organic Speedpay with really Alexis, wanted the just number

Scott Behrens

all had QX, of Well, Speedpay last in year. we

in So between closed core deal and back Speedpay We XXX% on year-over-year. really, XXXX. the difference It's there's that no of business May organic.

of bit was a had QX But So inorganic, comparable. QX mix. fully an organic

Odilon Almeida

to impact that would that was saw in I be right? right, you fair a think, significant Scott, tax, say volume it QX, the

Scott Behrens

if Yes, trying of you what yes. color Speedpay in lot get terms So of we are tracking delivers has it's lot it, it look our to business and you are expecting, at cash been to tracking if Obviously, also a versus case. flow. of some how margin

hindsight, very So really a cash, year in like through going business. contributor this, on a and good to has when especially you Speedpay are been the profitability focused

Odilon Almeida

Yes.

We in at And are payment. much the say, more bill look it scale very there we happy acquisition. to still room with grow and is

Alexis Huseby

you. next single on of know, helpful. On then be are a will mid Understood. or year Demand, able I range Thank sustainable a don't reach That's looking out, to sense of broadly when Okay. of you On growth the digits? And you years, sort do when more in a couple have Demand

Odilon Almeida

Yes.

we We not now. tell that. long about will I talking that giving term you November But XX, is are what like guidance be can

in November XX, talk And Alexis. that. tuned, will about stay we detail So

Alexis Huseby

Okay. Fair you. enough. Thank

Operator

questions. follow no are more Instructions]. me, sirs, Excuse [Operator on there

continue. You may

John Kraft

Well, for of front look We thanks, a forward Analyst our at day. good again Tuesday to Have Day. next getting listening. everybody, in everybody

Operator

today's concludes conference call. This

standby. disconnect. now may Presenters, You please

ACI Worldwide (ACIW) 8 Nov 202020 Q3 Earnings call transcript