ACIW - Earnings call transcript Q2 2021

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Operator

Welcome to the ACI Worldwide, Inc.

Second Quarter 2021 Financial Results Conference Call. My name is Sylvia, and I'll be operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions]. [Operator turn to now Kraft. call the will John over I Mr. Kraft, begin. you may

John Kraft

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

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

Before it the XX. the Needham Annual the XX hand that, With over and Technology over, I and will please to as August Odilon. to Canaccord be Wells Services Virtual I'd like note, Fintech attending Growth the call and XX well ACI Conference, and August Fargo turn Digital Fintech as Conference, Forum Transformation

Odilon Almeida

first you, joining Hello, Today, EBITDA X-pillar discussed When last revenue results for spoke Thank solid in conference delivered updates our second another In on end strong quarter. performance and you we call. million. our $XX everyone, XXXX and report earnings on our we quarter John. May, to we progress, I'm the million and share adjusted thank quarter our $XXX happy expectations QX, of high of with of at executing strategy. our

new in segments. revenue of impressive strength our in all in increasing all wins million was included of I'm These logos. quarter, global in recurring to we $XXX wins an with In recurring the report positive growth key revenue X% X Importantly, QX, sales X an list year-over-year recorded increase pleased organization. segments. our

our banking a our relationship with Canadian me Let major some share In segment, bank. we highlights. expanded

cloud, payment to global consolidate will in functionally single ecosystem. rich the a wire their We ACI's creating and real-time processing solutions

U.S.-based cloud. disruptor well-known their business move issuing technology plans We to financial a the with to with also contracted

work, Asia. including a years our to secured upgrade segment, win travel Indonesia. ACI's in in sale we and wins, In with operator the a up Merchant deal X secured with market Bank of cements comes Central point software. ACI important to our we win real-time important addition, nearly for is operations their In lead This of omnicommerce that leading fuel of payments to an and a real-time the growing

Finally, in several our channels very contracts, use our customer signed payment to competitive biller X win. lease large segment, and solutions significant our we benefit cost plans including to routing. from offer alternative ability This

payment global that excited topic. to deliver Moving offerings, announce best-in-class the we to allow accelerate cloud. The to ACI's collaboration agreement alliance to expanded solutions another and forming cloud our Microsoft, ACI and in a I'm with expand customer demand and is growing strength to companies go-to-market global how in modernization. towards key also onboarding. digital innovation. cooperate pathways creates from areas, It capitalize both to power including The ACI institutions, driving on Microsoft and alliance financial

continuing our combined we half broader beyond. in improving and pipeline, confidence robust will on us an to positioned strong performance economy, provide growing of objectives. long-term with Our the growth drive build We remain are that increasing well deliver accelerating a growth pipeline second and to XXXX laser-focused support and with that

creation business maximizing Importantly, short- first it to I With financials. the remain the that, long-term for to We over Scott? XX will actively the we achieve shareholders. opportunities to ever. of the review we are engaged in expect turn our ensure to year Scott Rule our in and to XXXX and discuss portfolio value M&A

Scott Behrens

We'll questions. rest of to line the our plan for good everyone. I open Thanks, through then outlook regarding results the our QX morning, go for then financial some for additional Odilon, and year. provide first and commentary the

contracts our total importantly, in revenue EBITDA the we've year. well. that down expectations. $XXX million The QX just come Odilon Recurring Total fees come as reminder, last XXXX, last recurring the year. the our renewals half to $XX year. million on grew in from And expirations revenue year. XX% very QX quarter of for based X% point revenue of that's and million, compared X in to over last in up of to of our one with QX was high the $XXX of in to a of As end fee revenue, X% of the in EBITDA last up those XX% from mentioned, renewed to quarter, compared the out higher at our million Adjusted second year. all year in-year as from here, more and this delivered $XX contract QX results license And timing which will was thing segments this was those revenue license flow-through was was up in

recurring for revenue in in to XX% due compared compared in which In growth revenue to with year. In Adjusted of most saw Adjusted our X% segment, and So QX nonrecurring improved increased QX the year. QX pick our by our revenue. compared XX% last revenue finally, again, to QX last recurring we We second of Merchant Merchant X% the in EBITDA its with been was year. segment looking X at EBITDA year, year. from recurring And representing QX we banking is impacted last last our revenue. revenue increased our saw saw in of segment of will X% segment that X%, compared revenue adjusted in recurring XX% entirely here And revenue segment, segment segments. growth representing recurring half. purchasing which to up down has its X%, XX% Banking our segment, the license revenue recurring EBITDA COVID-XX-related QX decline last to in delays, Biller

a ARR. As we've year, in been discussing, signed new the quarter annual from contracts or recurring metric, introduced we this new bookings revenue

QX, last markets. by North in X% down This saw quarter, offset in million delivering in our ARR actually over rebound new from international year. America QX $XX QX was ARR new declines We $XX last million, growth a in year,

as that revenue on and in international mentioned, of down at exiting of see cash of ended to the we the growth million XXXX. second been targeted $XXX our and on shares here, quarter. the overall in quarter. year. representing environment, the strong rest with credit and and to that our a of We increasingly we've note we in ended $XXX will half below paying dissipate repurchased leverage QX And outlook quarter we we'll debt debt, acquisition, the accelerate the the are following And we year billion ARR ratio finally, half we Odilon the X debt million as just able accelerate stock confident of begin delever see see very in particular million expect X.Xx available quarter new this new COVID-related here, headwinds the results $XX ARR $X.X the pleased of also are pace Speedpay end growth I'll to after our look we're hand leverage the the And ACI second we've improving be business As facility with with the for in XXXX, the back to say million during we as and ahead net in of X.Xx. revenue year. or with confident

to year are the of generate the revenue revenue $X.XXX guidance billion XXXX billion. we with $X.XXX range expectations So that, for in full year introducing full with to

pass $XXX range $XX range EBITDA of for to of adjusted We it we to are the $XXX in be $XXX back million. reiterating expectations million. now will our range to and some a EBITDA that, comments. million million be $XXX of a Odilon expect closing Odilon? for to QX, to And over revenue million in of $XX With to million I

Odilon Almeida

in high quarter of expectations. end I'd that reiterate to the was Thanks, coming results at another Scott. like strong our QX with

the expect and this We in in year. especially second considerable QX acceleration growth half

engaged first extremely fit We are on the like strategic X closing, of year our organic growth; would our third generate remains worldwide ACI with long-term short- transformational Rule will growth XX the of objective pillars, the ever clear, business and leave transformational XXXX. portfolio number create are to with continue three, actively and our two, and for predictable ultimate we to opportunities; with the of delivering and through growth and healthy generate remain to quite shareholders. in M&A with will we prospect pillar, M&A, In number starting X takeaways: we number growth, implementation of value the in happy one, profitable you its focus our for review to

questions. open will We Operator? the now call for

Operator

Davidson. D.A. [Operator first question Peter comes from from And Instructions]. Heckmann the

Peter Heckmann

of wondering, in I ARR that in release through evident revenue don't acceleration go may the number. bookings in be confidence increasing you not could talked some the really the things about half, like your it in was back press the you see that

closed that that that that contracts you've larger some talk are quarter you or you or imminent think deals confidence? since can about either some you giving software closed So maybe signed the have are

Odilon Almeida

Yes.

new question, thank back -- that I've start to you deals shooting would say, closure, time been More have come of and we're lots for table I'd those saying what just around within to discussing think I There countries been in than those QX. logos, to getting to the QX, And that's QX are the of banks CEOs QX definitely the I will globe. seeing of talking finally. the we I'm that for a that like for. period are Peter. good what

a I have. big second point of And renewals very part in we X confidence So considerable. backlog that's is have of QX, the the

we you those culture fourth we give we here. said This part very So X Pete, of about put delivered is let QX. me the some quarter I And that feel insight. together, confident that's the what deliver. will and

So you and we B QX see have for and like numbers in Plan the A, that C QX.

very confident about I'm very, those. So

Scott Behrens

Yes.

recall I pretty that at thing we is and were into think, cost add go-to-market taken were we organization. said think particularly, -- we reductions, the to we that only Day but I'd reinvesting Investor I had if the Pete, sales our some last November, the structural heavily you

the of if ARR had back the in that of QX, out more we in seeing we actually you actually sold projects year, America COVID. really started had started QX part to in But not that actually America. the this by building of see the late kind U.S., in quarter a new QX, customers was started And the look really impacted Canada. but pipeline. to in logo North up markets up ramp-up one X% international half hiring North year, a major growth, first by spent still pick spending pickup early in win a that transformation only So last wires our in peel was on offset declines a little that

that North ARR is year the in growth seeing the spending comfortable as Odilon just that high with, So picked in America. the certainly single our are digits growth again, should on this And of the combined renewal that have. up But half pipeline, contracts in, this those half based we're XXXX. book said, -- are what in heavily. the we're over second year second pretty come those renew that, And we that

Some signed. that's -- begins if XXXX why somewhere of is projected were revenue just growth them have you second That's range it. And year. X%. revenue the the growth until already and to have the to second wait do that out over to to new putting recognize implied be there, term going X% period half we of you the between comfortable that It's for the half

from half second the X% comfortable making half as the think really drive pipeline we're in driving to the in the with as ARR that that been well bookings the in second to what get here I book that it in investments second growth. the to quarter. to So pipeline half second started we're to That's And we're developed goes both renewal that's go-to-market. back seeing X%

Peter Heckmann

just a the question, big took helpful. Okay. like in quarter And year-over-year. That's looked maybe it jump interchange but housekeeping a

I the anniversarying Speedpay to was think related the that deal. of

happened? that curious that Just how why --

Scott Behrens

the it QX. Actually, tax deadline to QX in No. from movement filing was the

business the And so us. -- taxes of say, state at federal into interchange level Most essentially for that's is second I that the at the revenue net EBITDA that's tax high the the that breakeven. would business and level, and generally quarter. moved pretty a

brings it doesn't an us impact really much but gross So net it interchange, or EBITDA the in revenue revenue, level. brings

Operator

comes George question from next Craig-Hallum. Our Sutton from

Unidentified Analyst

This is George. James on for

lot see. a QX So sort obviously, of the have you to what stronger confidence the you normally in renewal activity sounds like compared of

on might the strength on those how Just half? kind other as some curious thoughts well? into segments of back And contribute the to your of

Scott Behrens

QX's necessarily Well, say, look yes, would I I at wouldn't renewal.

I think fourth at you sits think history, lot if it of I of the business. our it's -- a quarter the in yes, license back on side the look

rest whole a again, in that the a But comes pipeline the of hit renewal. There's And in that and the terms that pretty not business, so that year. high we're the it's midpoint with fee margin. of we incremental that on fee, comes the lot drives costs seeing at of license license as health on fulfillment of

say, size of so the progress in full year well I'd particular, that pipeline. that combination book the revenue and the on And as the of quarter as is fourth confidence the in the renewal

Unidentified Analyst

Got with that I some the Microsoft, go it. changed guess you what's of what allow before? And Sort have on there? into your you you couldn't that done there? does do detail then to relationship expansion of could Or

Odilon Almeida

to you. to Sure, talk George. good It's

So I the -- would that cloud to offering say in about fundamentals the enabled. I start We today, I could are our think of you we cloud.

examples rate. the in And that I think much competitive gave a you have very has we around But high see globe. better. can we the service we can with the been from which as win cloud, So do a

is very Technology very I fast. has evolving evolving this think fast.

this conversation so a just of long and with want and lots of what to bringing the That's continue is are really agreement needs not clients, with of what the have. the we softwares, successful. did innovate, doesn't about It's this treasurtory. here to here that ago all, period we mean So are there. are legacy we bring first why about [indiscernible] I to that's and market time of fulfill Microsoft, with And table we our that the and things BaseXX, to not other market innovation. to

one. it's a of about don't is, that exist Number creating hub in of number one today. the hub So offerings that's market It's I innovation. think of

the would the clients transformation, selling together number facilitating and I help, the banks. go talks one. moving So than better need to that's been direction. around but to digital And have the strong together, a Number are market. need they banks ACI about globe big two about and say important to But like very they everybody and of lost, banks is everybody is to talking It's really not I Clone. that talking those talk I'm most to go-to-market cloud. CEO saying think I they Microsoft and

co-investing And part it. the that's So is all in this. second think I of part the of are third we

So market. are we in co-investing the

are development those on and forth. We softwares co-investing so the of

are So very, I very think those And pillars. enthusiastic are about that. the we X

to of will going we tell in one a is can important years. partner. that this the most And alliances I us next cloud. think I future that because be you I you're the the -- And hear from is Microsoft think wonderful

Unidentified Analyst

just X Got if I then it. could. And more,

that gotten I I So into, why sort competitive digital just And you're feedback Latin around I far pain in solve leading bank, player you talked about them a points Could in release, these go ACI? them Banking-as-a-Service of what so that deals? you with press mean, a guess, were America. any you've helping win guess, from

Odilon Almeida

Yes.

I because think scale. how know know number we one, to they

mean a I can fast and very we companies, those talk, scale very name? without is, big the startups. you'll or have scale. helping not like fourth to a our country launch in and the keep that, now Latin a we global in America. X the about And of are already, they countries bank, to you those the giving very you nimble. there But Like they're example, question doing are to we possibility they're So for contract cloud they're concerned and hyped, X going

think money. clients one. a I that's It's amount -- the bring our know big of to we do -- number big know move what that. amount to And to so our And how our brand, how of we table transactions,

I think one. that's number

also is presence. X number think our I

so the Markets Markets, here, example, International Head International new whole head Latin new brought We the me Brazil, the Head the in America, Let other the of the an of also. sales Latin countries of I'm of have our for of confident team about beginning and a Head force. year, Head the insight of in the why give we America, a

and structure increasing only not qualifying we about now are it's So the sales, sales.

the the to results this. market, the and bringing of we executives are are We starting see best of

second positive think the those things about you why put so we're together, So I that's half. and all of

Operator

from question Mayank next from Our comes Needham Company. & Tandon

Kyle Peterson

Mayank. This is Kyle for Peterson actually on

So able the extract? or is of moving there need left impressive like more forward? that product guys really any more drive you rate and like Is mean. get leverage. I have think this touch to room and higher stronger kind SG&A It's Or efficiencies to to been a and on just wanted like you driving ARR keep been lean And those run you really guys to new growth here.

Scott Behrens

think over you in the we see at expense, up items, -- and if across selling the year. line I particular, marketing that Well, various cost you'll look last is

I of and cost year, we did pretty areas, other out we the the we last we heavily and the marketing where took are cost those areas in of part lot a we think -- a reinvested as selling where area. exercise

yes, would that, run say, starting get forward. get marketing this higher probably -- going heavily think invested year. a is But would probably I I rate what in even little we and we're in the -- But say where I think you So seeing we've pretty We'll dynamics of terms year-over-year, seeing selling you're I marketing selling this expense a reinvesting say, on and you're G&A, structure growth. good of of based rate we our the look is R&D at cost and cost if in X structure. it I'd and and sales run where bit

Odilon Almeida

Yes.

year, more... now is to Scott, -- going last right? I it's but XXX I fair we be going continue something to be points. we're that by basis a we XX to to margin more that what margin, saying basis And that increase think year, would improved say points mean like we're

Scott Behrens

incremental that of point at on revenue More cost function top of layering really of a on that this base.

scale. pretty that we good got structure can we've think a cost I So

Kyle Peterson

at if and But us buyback then of those priorities whether like it the down color. maybe know different you capital how priorities like Okay. leverage? allocation. seems -- it's around And guys would Like paid could That's of reducing just you here? debt. nibbled some kind on think good like do you rank I remind guys how kind some order, you buybacks, M&A of guys or about the

Scott Behrens

per rank in in we don't X the bought know million shares. and I'd se. them I order got quarter, if Yes. Obviously,

tuck-in buybacks think said pretty targeted midyear, we've a know debt we of on with is share disciplined on exit the X.X. cash I service, this of I on probably for kind exit been our time, We At we've X.X. acquisitions. X/X historically, year, X/X around long Obviously, X.X, X/X and flow as X.Xx. leverage type we're somewhere at year our

to cash So in -- obviously, were delevering. the Obviously, flexible deployment last how in deploy that we're was of over about obviously, that really cash. shares. deploying those terms X months, focused on flexible going we we're But we is that quarter, forward. getting getting it terms the certainly going cash more of of million XX in the in more But

Operator

Our Point. next from Compass question from Mike Grosso comes Del

Mike Del Grosso

you or you accretive revenue accretion, I you be EBITDA? asked helpful. one of wanted talk Odilon, specifically? just talk the guess to then are step pillar, criteria? EPS I some M&A. have change M&A. And And But ask your creation are on there specifically, would been higher or third provide through I and What to refresh value a on answered. any a progress about Most when pillar level growth talking to guess, Can this about you

Odilon Almeida

Sure, Mike. Sure.

-- about creation our about pillar our we to investors it's value to is our creation communication third investors. I value are prioritize about how how think friendly and this

to to things that talking you very table, you this I tell looking have about -- today. do have of going about pillar have I it's we our to of be are can parts Again, And them are my part portfolio. and can going day [indiscernible], lots in on we forward. of my we that I'm active So I I'm [bios] I today. announce very open. third that. don't I But tell anything And actively are talking

very no to in happens. anything expect able to surprises, want not and I a is our believe promise, buying been work. But can I announce believe what have but communicate of showing. that you investors, and yet, so right, clear that is, are And don't to when there lot I We in there buy

shareholders we what be see buy when moment, to sell in and are you're if So first buy, we going what working the will we when we for. if -- that's highly to it sell, we is accretive our

Mike Del Grosso

the you Okay. accretive, when guess, looking what And I mean to specific growth? of then say you fine just to you're when you accretion? Or do are need items some at

Odilon Almeida

I would say value creation.

create right right could but top away. line could be be EBITDA growth, So value should away,

Operator

next question Canaccord from from Our Vafi Genuity. comes Joseph

Joseph Vafi

then Could work you has the the guess, give historically, in the then the it fintech secondly, real-time intrigued lot update company forward was opportunity see done and businesses. And moving just, I growth a payments broader with globally. you ACI how real-time a and established And driver? fintech U.S. win on with clearly, a of for as

Odilon Almeida

Thank for the you so much question.

give to line seeing. here me to we the really talk that change you the You about are big

that say We we were I in backwards, would the -- [indiscernible] intermediate past. in areas, positioned if you are look not

this been have time. now offering, we solid like a big around issuing that the big offering accelerate and and banks the customers, and BASEXX, very current changing to to globe What acquiring so Microsoft our have big, forth. ACI We very solid

and positioning ourselves in the We Digital you Brazil. you fintechs X being raising about I like banks Azure. scaling we Brazil, And for and in talk real-time And rate I this can to that pretty offers other of are competitive, on starting they're those talk cloud winning just -- good payments. in about now new are are in old. years generation like the is can banks about fintechs. very

not the will in need But we come products fintechs, the game have Microsoft if growth from X the is end past. about future, we Microsoft with And that result lot the continue will big why banks. been us. our don't will the alliance a or be they now. products years, with the cash case, starting flow, working And with the cash forward attrition, to But the Microsoft to of going from the of Like you offer now, our continue And growth growth the are I you're to flow the -- So important, of to X I think will The together. and that of that's what come went we think banks. now. it. alliance would further the, of step our alliance so see that's we for and say, seeing with much we very have last you're modernization went

Now with this fintech, future that, and So it's with itself cloud, the Scott? real-time payments I'd in about past, Indonesia now right? and all to like the on about of all so it's ACI forth, right? repeat So in positioning instead Joe, the

Scott Behrens

Yes.

be as infrastructure in implemented waiting real the being the it's of growth growth. implemented, win, a then of part as future And infrastructure of why as That's for central markets. It's the it's But the where it's that really, I only I we and really yes, critical for Malaysia I'd in once absolutely the connectivity. thing that that an the infrastructure it's at big think infrastructure I But being banks. is well is, to in it's transaction critical. part quarter. a look producers power volume revenue very laying in to these really example Indonesia. in the those time. I both the the similar of key And we not think are win to add there one infrastructure QX a central the central also bank mean highlighted that the connectivity that

prime Bank for win QX is Indonesia, is a in highlight key of think Central example I of the So us. a the

Operator

this And Kraft closing now remarks. time. John we to the I will further have for questions call no at back turn over

John Kraft

the to at us. conferences. up coming look for Well, with catching day. a the upcoming thanks, We Have and good everybody, folks forward weeks in joining

Operator

ladies you, gentlemen. today's for This participating. you concludes and Thank Thank conference.

You may now disconnect.

ACI Worldwide (ACIW) 7 Aug 212021 Q2 Earnings call transcript