ACIW - Earnings call transcript Q4 2020

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Unidentified Company Representative

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

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

Odilon Almeida

John. you, Thank thank And joining call. our Hello you everyone! for creation XXXX January, strong I When significant and we my in preliminary our value the in our discussed shared results excitement my confidence of potential ACI. reinforced performance about more provide results, the and initiatives. a outlook update on Today, we with detailed will growth you XXXX XXXX

for me providing additional some Let color on XXXX. start by our financial results

the significant backdrop costs year-over-year on COVID-XX. laser rationalizing and improvements, maximizing even has margin focus against growth EBITDA driven of and net Our profitability

We for are highly be environment X% to In reaffirming the including the grew outlook previously, business also pleased time affected XXXX. we by Rule the in revenue a provided of ever the our XX pandemic. XXXX in first

grew focus basis We in to Aretakis's segment bookings under Our organic than adjusted the EBITDA management, shareholder grew on grew well XX% particular Demand our and the company our than margin XX%, chose points. more consolidated years. goals our our Eve growth extremely our achieve creation. EBITDA doubled. position value Further, net in new coming This results more and XXX bookings adjusted

value to November. initiatives to Turning initiatives, made change have headway, we the more nimble fit-for-growth a strategic become fit-for-growth, we step and announced company. we advancing in launched X On focus-on-growth plan January excellent our our creation organizational agile and

sales. and have We structure flattened centralized our successfully organizational

responsiveness seeing positive customers. faster through customer to model. the excited our about efficiency to forward with including benefits of are this results, leaner are flatter, continuing activity already and making We responsiveness look structure and new decision this We to increased and drive we

spend our global such product payments, areas with as high fast markets. initiatives, As sophisticated we part growth growth focus of have on and emerging large been e-commerce growing real-time targeting merchants our investment on

improved with real-time issuing globe Japanese sales both brand. recent by merchant expanded services goal contract the of leading and new XXXX. retailer leading biller across delivered relationship our largest and our with European a pharmacy many top and renewals including for our and customers. bookings result and International meet finance we and Peru. And to American in acquiring our from a auto first and important assigned of company, new the we include conglomerates. U.S. insurance results, furniture a U.S. of already as win and and number alliance also demonstrated chain, with Bank customers investment our It customers, the we and existing Mastercard. deals financial an Latin and In our track market space, our large one global increasing leading of In by on the Retail the are solutions XX% a company, associates by XX% the new sales one happened payments increasing We had payments Notable, partnership it in our wins QX [ph] e-commerce, we Mastercard to U.K. was

term am I built value doing are parallel, an foundation ACI we year confident divestitures important I that ACI. deliver new looking work our the transformation have to creation empower value long of expect XXXX our deliver of under our achieve of transactions, into shareholders. step review M&A. quarter and our to we milestone portfolio transformational our deliver will strategic fourth our profitable for will we growth I actively of we accretive summary, be to continue that first in for evaluating maximize sharpen and time investments and growth third by in focus profile, we to the shareholders. am XX maximize will and organic proud incredibly to ACI's strong the and we to us of a the business undertake continuing plan, and am to rule pursuing and Finally, the to ever pillar our our profile growth opportunities complete and change are and for confident XXXX value With continuous In a performance momentum, for

appointment ACI Scott to March briefly made call today. in financials, two Before on one touch years. track Nominating of Directors discuss additional our I'd over announcement I Committee an appointed reached like Governance we of new following Board's to shareholders, of builds an the to Starboard Starboard to on Pursuant we Corporate independent the agreement with be our work Directors and two independent Value, over turn This refreshment, Board announcement identify to XXXX. our to the the record past two with to will the

this We to are efforts value. we maximize shareholder new and have I will it significant create profitability turn value Scott Scott. that, financials. fresh offer will to With directors as to to reached continue and over our these pleased discuss agreement expect and the perspectives

Scott Behrens

morning commentary regarding I good then for and first plan our some provide additional everyone. for outlook Odilon our through Thanks XXXX. XXXX and financial to go results

the questions. line then open We for will

For the compared up were XX%, XX% new XXXX. bookings up total were full XXXX while year bookings to

our revenue to XXXX by having XX%, up XX% over new from X% total New in primarily license XXXX, new offset than COVID revenue from year resulting related revenue Premise now represents in grew above bank of fee purchasing in Revenue to our business business non-recurring purchasing last non-recurring Demand up due customers, company doubled bookings total revenues. a results, bookings XX% XXXX. significantly license $X.XX our license in XXXX decisions of primarily was fee from sales, to On from COVID-related XXXX, declined, while revenue. due in by from software due X% full lower revenue delays. down declines our growth in year, revenue the was which and billion, impacted our Speedpay more license On On business Recurring largely delays Premise significantly and

from our business Revenue was impact our XX% sales, know existing are customer customers. it the didn't revenue primarily new On not our due Speedpay. particular meaning, but our in mission-critical, Demand license renewals, from are up so As you customers, from it from products impact XXXX, we to in losing did contribution bank

the volumes we offset In addition, omnichannel over on volumes payments, and COVID-related could business, profitability including biller an in Obviously impacting liquidity. and merchant e-commerce verticals slowing in our behaviors the in solution. control headwinds laser little customers organic macro-related control, helping certain we bank higher we transaction on biller had our areas purchasing were but our in saw we of XXXX basis focused the and

generate a and efforts XX% of XX% from to from Our margin growth EBITDA business helped significant this XXXX, just incremental XX%, in Speedpay net million, important Consolidated in in up is contribution, to EBITDA XX% with basis. operational expanded up our XX% $XXX adjusted growth XXXX improve profitability adjusted result to to on of discipline significant On it's not Demand organic grew saw the in EBITDA XXXX. as our in XXXX, from XXXX. improvement that We profitability also note an

with our line improvements our very able On Demand pleased in XX% business. the are to On with with efforts We maintain Premise which profitability cost our our were business, And XXXX. even decline control margins in in were XXXX, our revenue in

and operating and $XXX up growth cash more to cash than from we year million Our cash including XXXX, in available ended from million liquidity, flow EBITDA with growth significant of million, the with activities our in XXXX, revolver. $XXX flow $XXX strong double contributed on

the shares half XXXX, representing million expect XXXX. repurchased finally ratio X through of billion with ended turning to the of of down our our paid we debt we the year expect the And half net debt of and stock digits first we for We second outlook in headwinds growth million to currently leverage $X.X X.Xx. a of year $XXX During to while mid-single accelerate persist XXXX, for the COVID-XX the year. related in debt, to

we range $XXX assumes XXXX be net expansion. million to Day in in November. we cost EBITDA at discussed Analyst related our EBITDA This a to full excludes the adjusted of which $XXX adjusted For reduction year cost one-time margin to expect million, initiatives

QX, revenue $XX in $XXX a EBITDA of we to For be and million $XX adjusted million. to million a range to of million in be range to XXXX, $XXX expect

comments. back So with now Odilon. it that, for I some pass over Odilon closing to will

Odilon Almeida

with we and forward performance are In in company's Thanks Scott. continuing to the in closing, XXXX. pleased our momentum look XXXX

confident three-pillar our excel In into parallel, divestitures growing I structure we to to on positioned higher well advance are value continue will our to focus to forward we are are our increased and our long-term transformational investments organizational We our deliver looking areas. new that and update within actively strategy shareholders. and we you maximize to progress. growth look profile our and on

Thank you. are to take We your happy questions. now

Operator

the have We question Stephens our Brett from Huff Instructions] from line of Inc. first [Operator Mr.

Your line is open. now

Brett Huff

are How guys. you? morning, Good

Scott Behrens

morning. Good

Odilon Almeida

Good morning, Brett.

Brett Huff

of win. Just number a joint congrats Mastercard couple on the one, questions;

sales unpack just of you view? process that Peru somewhere in I competitive? America. the or it from how us did Was know decision over the a think bit? was what give finish little of You point – a Can it line go? got guys Kind you Latin

Scott Behrens

yeah, that, that a on We summer. answer enhanced of to joint product that, and Peru. to go countries well more it targeting summer list to last Mastercard, effort, a really partnership really in partnership last market and Yeah, specific particular, that's with that a that had we is of announced announced

confident it's So and in we're early that. really traction getting obviously

Odilon Almeida

and that's basically of it’s we Mastercard to the so to be it. are national operate going Brett, switch is summary the Yeah, going the and software,

Brett Huff

division central stuff, is hub. labor? of of are doing doing that is ramp the this on whereas so you where most And bank of guys the kind Is the Mastercard

Odilon Almeida

correct. Correct,

Brett Huff

that's helpful. Okay,

question is the guidance. Second just on

said you guys half. the mid-single in to think I accelerating digits back

next mentioned what's bit that sort longer a Is that a half? that on impact the think feeling digits am Analyst bit the Is of a COVID the I three negative little misreading mid-single over we’re of or Day. You in little first I shift just communication? or at going had years

Odilon Almeida

shift. a Brett, we believe no don't Yeah, it's

question of that We I is the continue so under the on to you basically, we see you banks, of we said, as versus effect to there in QX our nothing impact same quarter, the have first that. the quarter, we license continue that's only about delaying decisions COVID-XX so no see. changed so guidance revenue just mean know continue COVID-XX before,

also second COVID-XX and is effects why will during We continue. saying We bill and with be. don't half, We expect digits effects the them volume payment half. we mid that's some consistent QX, long the second of see they of so know that on are by the to how also continue don't

Brett Huff

know preview how know Just I it? say. that, is qualitative any – reviewing on any but kind mentioned us of Okay, just parameters review, of on on narrow you is one, what portfolio, strategic that? that's us the helpful. then thoughts the if know the you think or how you of much I coming give an don't you X-K I broad could probably but And give can kind last that? there soon, are out

Odilon Almeida

right. about, are broad. I we – the what very third is mean, that's It's and pillar

news since no be is way here. change said of buying that is That to pillar the some no I there – provide mean beginning So third through divestiture also creation our a assets continue strategic highly that. assets in we shareholders accretive do to could we step we to or the and value through M&A.

to broad, So very continues so. it's be very broad and

Brett Huff

what Okay, I guys. great. appreciate That's the needed. I time

Scott Behrens

Thanks Sure. Brett.

Operator

our question Heckmann of line from the And Peter Davidson. is next from

line Your now is open.

Peter Heckmann

you're some gentlemen. fourth in a the that the RFP wanted Nice institution might in country quarter. large financial a as for on you both thinking or about pipeline should basis morning, where talk we be renewal mind? be results Good about If keeping seeing you how basis as well new business? can I activity to XXXX, see

Scott Behrens

made know you you renewal say it I was prepared really issue. the in wasn't Yes, it’s book Even somewhat XXXX, know. the my similar comments with that I'd remarks

us sales have renewals. pick come spend, the we're to I'm to seeing to pipeline the we opportunity as really there in I year to our we second say is XXXX. year second growth year going what and digit. banks our net this solid and allow that's half existing mid-single short in but up referring net whether of where renewal see where was more targets would to That up, new really fell get new the logos renewals, XXXX. in That's of the in know a spending was we the in You picking where is going those book that It half new cross-sell here not really in again long-term the of in versus applications. new of or deliver

Odilon Almeida

year. of United see Yes also the calls CEO Singapore. was And tunnel banks some what with meetings you in that States, CEOs to the Peter, tell for can in I this in in is in being light the second Brazil of in here banks. the of I with half some start I

not will anymore projects talk So about to modernization, to they that cloud. going start the the talk they about about

year. second I'm the positive, I'm the So optimistic of about half

half state will this business I to more the second normal a year. of wise by think get things

Peter Heckmann

And maybe have great. a payment traditional direct great, the countries versus just between the that Maybe bill talk about That's more to and shifted how some payment payments? you already of and the time that's interplay payments? of then in real the kind pay account-to-account biller has payments, direct over volume can interplay real-time a much of then card-based

Odilon Almeida

for because been mean I accounts already, launched already it give few tell right, have like like you guess like example, – picks that can we example real. Brazil Brazil, a the just I has X becomes months. will is and making in more million an I I

So fast. when it very starts, it starts

three of three the for basically globe and around ways these So variances the right, payments there all are others ways. are

what XX% center or be that seeing. and will have expect much It's that's have continue it's to been going to growth the of as has of down real and And to slow and really stable in you have much that's the payments. everybody’s and physical more can way cards strategy. past bit, the is cards forward we're going little bit. can plus, payments it's be can is But time as our looking to growing real-time a growing little cash; a the down and effective, not have we they bulk You what that going why a been you going efficient that's why right, cash

Peter Heckmann

Got you. it. Thank

Operator

Sutton the from question our George And from of line Mr. Craig-Hallum. is next

is open. now line Your

George Sutton

Thank first adds. being to Board my the your on and shareholders upcoming responsive you, congratulations with

ask Odilon history, and at talked of weekly given press you always about sprints an I long-term going the that to and your know, look an item, has your wanted to shareholder think well in against been as run and in wanted amorphous release but may long-term to I [inaudible], the it's I that's be business. that also received. kind up you the and appreciation, in maybe you script

to Just in everybody process? has understand that Thanks. sense the timing of whole this

Odilon Almeida

and communicated know, script, the flaw you thing. there that – a because think thank you I in I for I Yes, think the just George wrong question, because is we

long-term. the for short-term, middle-term for here are We the the and for

are rule this time value it's the value creation to in most now, XX proof achieve going for So important its also is think and I long-term, the the the creation it of we first for year.

in nine months, year – to so So shareholders. achieve immediate almost right. XX, that This be after it’s mean that company. year shareholders, you been is creates the the going know to and rule one will value I've ever now revenue to first of that the I company

So great so yeah, George. catch

and about did we short, So medium long-term.

George Sutton

potential I'm the for of growing to that how slower appreciate areas, may you're areas I those divestitures, your Relative your targeted really growing not faster areas, that sale? about you're as may investment be Alright, clarification. of the investment in talking thinking a you or just increasing are curious, the

Odilon Almeida

Yeah.

important not you growth, to high be are and on areas we going by are and have billers have digits, and mid that digits looking double-digits, have growing growing for you issuing mid like areas but to and we and grow, by will areas that now, basically protect acquiring, assets are close we we us, So to be that that other not divesture strategic. by call are

to funds the invest on areas. it but protecting high areas, heavily So core balance releasing a fine the is on

George, it was I company top year are the to by exercise so. able that and we give that zero able to from much and and what close would see, of investments here, year Just I it to you of and business more time we that's company $XX really the it that we real and the year the zero-base color ‘okay, need?’ this find went do based it. last give was why And very point that to zero million came we about of with I were say to first, it reinvest line, on through in we of to $XX were part part of based. Scott bank through they next bottom million

George Sutton

appreciate thoughts. I the Perfect!

Scott Behrens

George. Thanks

Odilon Almeida

George. Thanks

Operator

are time at There questions Instructions] no this [Operator sir.

now may you. proceed. You Thank

Unidentified Company Representative

up good thanks Well, day! for joining coming weeks. forward catching look in everybody to with a us. We the everybody Have

Operator

gentlemen, this Thank And for concludes conference and participating. ladies today’s call. you

disconnect. now may You

ACI Worldwide (ACIW) 27 Feb 212020 Q4 Earnings call transcript